Statement of Cash Flows—Indirect Method Peoria Corp. just completed another succ

Question

Statement of Cash Flows—Indirect Method

Peoria Corp. just completed another successful year, as indicated by the following income statement:

Presented here are comparative balance sheets:

Other information is as follows:

Dividends of $59,870 were declared and paid during the year.

Operating expenses include $51,570 of depreciation.

Land and plant and equipment were acquired for cash, and additional stock was issued for cash. Cash also was received from additional bank loans.

The president has asked you some questions about the year's results. She is very impressed with the profit margin of 17.99% (net income divided by sales revenue). She is bothered, however, by the decline in the company's cash balance during the year. One of the conditions of the existing bank loan is that the company maintain a minimum cash balance of $51,570.

Required:

Prepare a statement of cash flows for 2014 using the indirect method in the Operating Activities section. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash.

Peoria Corp.

Statement of Cash Flows

For the Year Ended December 31, 2014

Cash Flows from Operating Activities

  

$  

Adjustments to reconcile net income to net cash provided by operating activities:

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

$  

Cash Flows from Investing Activities

  

$  

  

  

  

$  

Cash Flows from Financing Activities

  

$  

  

  

  

  

  

$  

  

$  

Cash balance, December 31, 2013

  

Cash balance, December 31, 2014

$  

For the Year Ended
December 31, 2014

Explanation / Answer

Answer :

Peoria Corp. Statement of Cash Flow at 2014 Cash flow from operating activities Sales 1249200 Increase in account receivables -50890 Cash collection 1198310 Cost of Goods Sold 698350 Increase in inventories 30380 Decrease in Prepaid expenses -8920 Increase in Accrued Liabilities -3870 Decrease in account payable 17660 Cash payment for purchase 733600 Other Operating exp. 151170 Cash operation expenses 151170 Interest Expenses 25180 Cash Interest 25180 Income Tax 149800 Decrease in Income tax payable 20250 Cash Payment for income tax 170050 Net Cash Flow From Operation 118310 Investment activities Increase in Equipment -296740 Loss on sale of Equipment 0 Profit on sale of Long term investment 0 Decrease In long term investment 0 Cash flow from investment -296740 Financing Activities Stock Issued 150630 Contributed Capital in excess of pay 0 Dividend paid 59870 Fund raise from Bank loan 49720 Cash flow from Financing 140480 Net Cash Flow -37950 Cash at 2014 50770 Cash at 2013 88720 -37950

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