Statement of Cash Flo connect Preparing a Statement of Cash Flows (Indirect Meth

Question

Statement of Cash Flo connect Preparing a Statement of Cash Flows (Indirect Method) (AP12-1) Sharp Screen Films, Inc.,is developing its annual financial statements at he satements are complete except for the statement of cash flows. The PROBLEMS P12-1 summarized as follows: sheets and income statement are s Prior Year Current Year Balance sheet at December 31 73.250 63,500 Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation 15,250 23.450 21,350 18,000 160,350 209,250 (57450)(45,750) $263.750 $217-450 s 16,500s 19,000 Accounts payable Wages payable Note payable, long-term Contributed capital Retained 2,000 56.300 103,950 85,000 2,700 71,000 65,900 58,850 5263.750 $217450 $205,000 Cost of goods sold Depreciation expense Oxher expenses Net income 123,500 11,700 43,000 s 26,800 d. N 0 a, Boughtipment for cash, $48,900, b. Paid $14,700 on the long-term note payable. c. Issued new shares of stock for $38,050 cash. d. Dividends of $650 were declared e. Other expenses all relate to and paid. Accounts payable includes only inventory purchases made on credit. . Prepare the statement of cash flows using the indirect method for the year curiend year 2. Based on the cash flow cash by Sharp Screen Films during the statement, write a short paragraph explaining the major P12-2 1,12-2, 12-4,12-6 Statement of Cash Flows (Indirect Method) (AP12-2) current year 8 the major sources and uses statemetts ure shects and income tatemens are

Explanation / Answer

Sharp Screen Films, Inc. Statement of cash flows For the year ended December 31 Cash flows from operating activities Net Income $26,800 Adjustments to reconcile net income Depreciation expense $11,700 Decrease in accounts receivable $6,100 Increase in inventory -$5,450 Decrease in accounts payable -$2,500 Decrease in wages payable -$700 $9,150 Net cash provided by operating activities $35,950 Cash flows from investing activities Purchase of equipment -$48,900 Net cash provided by investing activities -$48,900 Cash flows from financing activities Payment of long-term notes payable -$14,700 Cash dividends paid -$650 Issuance of common stock $38,050 Net cash used by financing activities $22,700 Net increase in cash $9,750 Cash, January 1 $63,500 Cash, December 31 $73,250 There was an increase in cash for Sharp Screen Films, Inc. this year of $9,750. Operating activities provided positive cash flows of $35,950, this inflows of cash from operating activities combined with the $22,700 proceed from financing activities allowed the company to invest in new equipment and pay down long term note.

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