9:46 PM ezto.mheducation.com AT&T; XS Supply Company is developing its annual fi

Question

9:46 PM ezto.mheducation.com AT&T; XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized Previous Current Year Year Balance Sheet at December 31 34,480 35.400 41,400 124,000 (30,400) 29,500 28,200 38,200 102,000 Accounts Receivable Equipment (25,200) $204,880 $172,700 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings S 36,400 27,200 1,500 46,000 72,800 25,200 1,280 39,800 89800 37,600 $204,880 $172,700 Income Statement Sales Revenue Cost of Goods Sold Other Expenses S 122,000 71,000 38,600 Net Income $ 12.400 Additional Data: . Bought equipment for cash, $22,000 b. Paid $6,200 on the long-term note payable e. Issued new shares of stock for $17,000 cash. d. No dividends were declared or paid e Other expenses included depreciation, $5,200; Salaries and wages, $20,200; taxes, $6,200; utilities, $7,000 Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash Required 1.Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Explanation / Answer

XS SUPPLY COMPANY Cash Flow Statement For year ended 31 December Cash flows from operating activities Net Income $   12,400 Adjustment to reconcile net income to: Depreciation expense $      5,200 Increase in accounts receivable $   (7,200) Increase in inventory $   (3,200) Increase in accounts payable $      9,200 Decrease in salaries and wages $       (220) $      3,780 Net cash provided by operating activities $   16,180 Cash flows from investing activities Purchase of equipment $ (22,000) Net cash used by investing activities $ (22,000) Cash flows from financing activities Repayment of long term note $   (6,200) Proceeds from issuance of stock $   17,000 Net cash provided by financing activities $   10,800 Net increase in cash and cash equivalents $      4,980 Cash and cash equivalents at beginning of period $   29,500 Cash and cash equivalents at end of period $   34,480

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