Statement of Cash Flows (Indirect Method) Use the following information regardin

Question

Statement of Cash Flows (Indirect Method) Use the following information regarding the Lund Corporation to (a) prepare a statement of cash flows using the indirect method and (b) compute Lund's operating-cash-flow-to-current-liabilities ratio. 12,600 5,600 4,200 8,400 30,800 21,000 40,600 126,000 84,000 Cash received from issuance of common stock 49,000 23,800 40,600 5,600 18,200 106,400 2,800 140,000 Accounts payable increase Accounts recelvable increase Accrued liabilities decrease Cash balance, January 1 Cash balance, December 31 Cash paid as dividends Cash paid to purchase land Cash paid to retire bonds payable at par Cash received from sale of equipment Depreciation expense Gain on sale of equipment Inventory decrease Net income Prepaid expenses increase Average current liabilities

Explanation / Answer

LUND CORPORATION Statement of Cash Flow (Using Indirect Method) For the year ended December 31 Particulars Amount $ Cash flow from opreating activities Net Income 106400 Adjustments to reconcile net income to net cash provided by opreating activities Adjustment for non cash effects Depreciation 40600 Amortization 8400 Gain on sale of equipment -5600 Change in opreating assets & liabilities Increase in Accounts Receiviable -5600 Inventory decrease 18200 Increase in Prepaid expenses -2800 Decrease in Accrued liabilities -4200 Increase in Accounts payable 12600 Net cash flow from opreating activities (a) 168000 Cash Flow from Financing activities Issue of common stock 49000 Cash dividends paid -40600 Redemption of bonds -84000 Net cash Flow from Financing activities (b) -75600 Cash Flow from Investing activities Sale of Equipment 23800 Purchase of Land -126000 Net cash Flow from Investing activities (c) -102200 Net Channge in cash c=a+b+c -9800 Beginning cash balance 30800 Closing cash balance 21000

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