Statement of cash flows (indirect method). Carter, Inc. has prepared the followi

Question

Statement of cash flows (indirect method). Carter, Inc. has prepared the following comparative balance sheets for 2014 and 20 15: 2015 2014 Cash Accounts receivable Inventory Prepaid expenses Plant assets Accumulated depreciation Patent $ 292,000 149,000 150,000 18,000 1,275,000 (450,000) 153,000 117,000 180,000 27,000 1,050,000 (375,000) $1,587000 1,326,000 Accounts payable Accrued liabilities Mortgage payable Preferred stock Additional paid-in capital-preferred Common stock Retained earnings s 168,000 42,000 450,000 60,000 525,000 120,000 600,000 600,000 $1,587.000 $1,326,000 The Accumulated Depreciation account has been credited only for the depreciation expense for the period. The Retained Earnings account has been charged for dividends of $148,000 and credited for the net income for the year. 1. 2. The income statement for 2015 is as follows: Sales revenue Cost of sales Gross profit Operating expenses Net income $1,980,000 1,089,000 891,000 680,000 Instructions From the information above, prepare a statement of cash flows (indirect method) for Carter, Inc. for the year ended December 31, 2015.

Explanation / Answer

Carter Inc Statement of Cash Flows For the year ending 2015 Cash Flow from opearating activities: Net Income          211,000 Add/(Less) non cash effects on operating activities Depreciation expenses            75,000 Amortisation Expenses - Patent            21,000 Increase in Accounts Receivables          (32,000) Decrease in Inventory            30,000 Decrease in Prepaid Expenses              9,000 Decrease in Accounts Payables          (15,000) Increase in Accrued Liabilities            18,000          106,000 Net Cash provided by operating activities          317,000 Cash flow from investing activities Purchase of Plant Assets       (225,000) Net Cash provided by investing activities       (225,000) Cash flow from Financing activities Proceeds from issue of Preferred Stocks          645,000 Dividends Paid - Common Stock       (148,000) Mortgage Payable Paid       (450,000) Net Cash provided by Financing activities            47,000 Net Increase in Cash          139,000 Cash Balance at 2014          153,000 Cash Balance at 2015          292,000

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