Statement of Cash Flows—Indirect Method The comparative balance sheet of Amelia

Question

Statement of Cash Flows—Indirect Method The comparative balance sheet of Amelia Enterprises, Inc. at December 31, 2014 and 2013, is as follows: Dec. 31, 2014 Dec. 31, 2013 Assets Cash $49,970 $61,230 Accounts receivable (net) 76,780 82,550 Merchandise inventory 109,680 102,320 Prepaid expenses 4,470 3,100 Equipment 223,440 183,320 Accumulated depreciation-equipment (58,090) (44,960) Total $406,250 $387,560 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $85,310 $81,000 Mortgage note payable 0 116,270 Common stock, $1 par 13,000 8,000 Paid-in capital in excess of par-common stock 204,000 109,000 Retained earnings 103,940 73,290 Total $406,250 $387,560 Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2014 are as follows: Net income, $78,460. Depreciation reported on the income statement, $28,350. Equipment was purchased at a cost of $55,340, and fully depreciated equipment costing $15,220 was discarded, with no salvage realized. The mortgage note payable was not due until 2016, but the terms permitted earlier payment without penalty. 5,000 shares of common stock were issued at $20 for cash. Cash dividends declared and paid, $47,810. Required: Hide Hint(s) Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required.

Explanation / Answer

Statement of Cash Flow Particulars Amount Total Amount Income                78,460.00 Depreciation                28,350.00 Decrease in AR                  5,770.00 Increase in inventory                (7,360.00) Increase in prepaid expenses                (1,370.00) Increase in AP                  4,310.00 Increase in STD Cash flow from operating activities           108,160.00 Cash flow from Investing activities Purchase of PPE             (55,340.00) Cash flow from Investing activities           (55,340.00) Cash flow from Financing activities Issue of Stock                  5,000.00 Issue of paid in capital in excess of par                95,000.00 Payment of Mortgage note payable           (116,270.00) Dividends Paid = 78460 - 30650             (47,810.00) Cash flow from Financing activities           (64,080.00) Opening cash and cash equivalents             61,230.00 Closing cash and cash equivalents             49,970.00

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