Statement of Cash Flows—Indirect Method The comparative balance sheet of Mavenir

Question

Statement of Cash Flows—Indirect Method

The comparative balance sheet of Mavenir Technologies Inc. for December 31, 2014 and 2013, is shown as follows:

The following additional information was taken from the records:

The investments were sold for $124,920 cash.

Equipment and land were acquired for cash.

There were no disposals of equipment during the year.

The common stock was issued for cash.

There was a $64,610 credit to Retained Earnings for net income.

There was a $42,890 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required.

Mavenir Technologies Inc.

Statement of Cash Flows

For the Year Ended December 31, 2014

Cash flows from operating activities:

  

$  

Adjustments to reconcile net income to net cash flow from operating activities:

  

  

  

  

Changes in current operating assets and liabilities:

  

  

  

  

  

  

  

  

Net cash flow from operating activities

$  

Cash flows from investing activities:

  

$  

  

$  

  

  

  

Net cash flow used for investing activities

  

Cash flows from financing activities:

  

$  

  

  

Net cash flow provided by financing activities

  

  

$  

Cash at beginning of the year

  

Cash at end of the year

$  

Dec. 31, 2014 Dec. 31, 2013 Assets Cash $274,800 $259,160 Accounts receivable (net) 99,550 93,080 Inventories 281,030 275,590 Investments 0 106,770 Land 144,140 0 Equipment 310,060 243,650 Accumulated depreciation-equipment (72,590) (65,700) Total $1,036,990 $912,550 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $187,700 $179,770 Accrued expenses payable (operating expenses) 18,670 23,730 Dividends payable 10,370 8,210 Common stock, $10 par 56,000 44,710 Paid-in capital in excess of par-common stock 210,510 124,110 Retained earnings 553,740 532,020 Total $1,036,990 $912,550

Explanation / Answer

Mavenir Technologies Inc.

Cash Flow Statement

Indirect Method

$ $ Cash flows from operating activities Net income 64,610 Add depreciation expense 6,890 Less gain on sale of investments (18,150) 53,350 Changes in current operating assets and liabilities Increase in accounts receivable (6,470) Increase in inventories (5,440) Increase in accounts payable 7,930 Decrease in accrued expenses (5,060) (9,040) Net cash flows from operating activities 44,310 Cash flows from investing activities Purchase of land (144,140) Purchase of equipment (66,410) Sale of investments 124,920 Net cash used in investing activities (85,630) Cash flows from financing activities Dividends paid (40,730) Issue of common stock 97,690 Net cash flows from financing activities 56,960 Net increase in cash 15,640 Beginning cash balance 259,160 Ending cash balance 274,800

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