Intermediate Account Statement of cash flow Use the data below to create a State

Question

Intermediate Account

Statement of cash flow

Use the data below to create a Statement of Cash Flows using the direct method

Wizard Company had avaliable at the end of 2015 the information shown below:

$20,000

Income Statement and Divident Information for the Year Ended December 31, 2015:

Comparative Balances Sheets 2015 2016 Cash

$20,000

$12,000 Short-term investments 31,500 40,000 Inventory 95,600 90,000 Prepaid expenses 15,600 26,000 Land 200,000 260,000 Buildings 650,000 650,000 Accumulated depreciation-buildings (75,000) (57,000) Equipment 346,000 150,000 Accumulated depreciation-equipment (41,000) (60,000) Patents 68,000 72,000 TOTAL ASSETS $1,310,700 $1,183,000

Explanation / Answer

Answer:

Wizard Company Statement of cash Flow Cash flow from operating activities: Net income 103350 Adjustment: Depreciation/Amortization expense 63000 Gain on sale of land -21000 Loss of sale of short-term investment 8000 Increase in short term investments -8500 Decrease in inventory 5600 Increase in prepaid expenses -10400 Increase in accounts payable 5900 Decrease in income tax payable -5800 Dividend Revenue -4100 Increase in salary and wages payable 8000 Increase in discount on bonds payable -4850 Net cash flow from operating activities 139200 Investing activities: Purchase of land -60000 Sale of equipment 24400 Purchase of patents -4000 Net cash flow from investing activities -39600 Financing activities Increase in long term notes payable 25000 Sale of common stock -92600 Dividend paid -40000 Net cash flow from financing avtivities -107600 Net increase or dec in cash -8000 Add: opening cash 20000 Closing cash 12000

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