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

Question

Statement of Cash Flows—Indirect Method

The comparative balance sheet of Mavenir Technologies Inc. for December 31, 2014 and 2013, is shown as follows:

The following additional information was taken from the records:

The investments were sold for $111,970 cash.

Equipment and land were acquired for cash.

There were no disposals of equipment during the year.

The common stock was issued for cash.

There was a $59,040 credit to Retained Earnings for net income.

There was a $38,440 debit to Retained Earnings for cash dividends declared.

Required:

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.

Mavenir Technologies Inc.

Statement of Cash Flows

For the Year Ended December 31, 2014

Cash flows from operating activities:

  

$  

Adjustments to reconcile net income to net cash flow from operating activities:

  

  

  

  

Changes in current operating assets and liabilities:

  

  

  

  

  

  

  

  

Net cash flow from operating activities

$  

Cash flows from investing activities:

  

$  

  

$  

  

  

  

Net cash flow used for investing activities

  

Cash flows from financing activities:

  

$  

  

  

Net cash flow provided by financing activities

  

  

$  

Cash at beginning of the year

  

Cash at end of the year

$  

Dec. 31, 2014 Dec. 31, 2013 Assets Cash $246,880 $232,300 Accounts receivable (net) 89,440 83,430 Inventories 252,460 247,030 Investments 0 95,700 Land 129,500 0 Equipment 278,560 218,400 Accumulated depreciation-equipment (65,210) (58,890) Total $931,630 $817,970 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $168,630 $161,140 Accrued expenses payable (operating expenses) 16,770 21,270 Dividends payable 9,320 7,360 Common stock, $10 par 50,310 40,080 Paid-in capital in excess of par-common stock 189,120 111,240 Retained earnings 497,480 476,880 Total $931,630 $817,970

Explanation / Answer

Increase in current assets is a cash outflow and decrease in current liabilities is a cash outflow.

Decrease in current assets is a cash inflow and increase in current liabilities is a cash inflow.

MAVENIR TECHNOLOGIES INC. Statement of cash flows for the year ended December31, 2014 Net Income 59040 Adjustments to reconcile net income to net cash flow from operating activities     Depreciation expense (65,210 - 58,890) 6320     Gain on sale of investments (111,97 0 - 95,700) -16270 Adjustment for changes in current operating assets and liabilities     Accounts receivable -6010     Inventories -5430     Account payable 7490     Accrued expenses -4500     Dividend payable 1960 Net cash flow from operating activities 42600 Cash flow from investing activities     Sale of investments 111970     Purchase of equipment -60160     Purchase of land -129500 Net cash flow from investing activities -77690 Cash flow from financing activities      Issue of common stock 88110      Payment of dividends -38440 Net cash flow from financing activities 49670 Net cash flow for the year 14580 Beginning cash balance 232300 Ending cash balance 246880

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