Required: Prepare, in good form, a Statement of Cash Flows using the indirect me

Question

Required: Prepare, in good form, a Statement of Cash Flows using the indirect method Dingel Dorf Company Income Statement For the year ended December 31, 2016 Net Sales Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Other Revenue and Expenses: $950,000 600,000 $350,000 250,000 $100,000 $15,000 3,000 Gain on sale of investments Loss on disposal of equipment Total Other Revenue and Expenses Income Before Income Taxes Income Tax Expense Net Income Additional Information: During the current vear the following transactions occurred A. Equipment that cost $10,000 and was 60% depreciated was sold and cash was received. B. Cash dividends were declared and paid. C.Common Stock was issued in exchange for Land. D. Investments that cost $35,000 were sold. 12,000 $112,000 45,000 $67,000 08/14/2017

Explanation / Answer

Please find Cash Flow Statement below for Dingel Dorf Company-

Cash flows from operating activities

$

Net income

    67,000.00

Adjustments for:

Add : Depreciation and amortization

(37000-28000) for Building & 13000 for Equipment

     22,000.00

Add: Income Tax Expense

     45,000.00

Add- Loss on Sale of Equipment

       3,000.00

Less- Gain on Sale of Investment

   (15,000.00)

Change in Accounts payable

(66000-60000)

       6,000.00

Change in Accounts Receivable

(122000-145000)

   (23,000.00)

Change in Inventory

(61000-75000)

   (14,000.00)

Less- Income Tax Paid

(10000+45000-12000)

   (43,000.00)

     48,000.00

Cash Flow From Investing Activities

Sale of Investment

(refer Investment Account)

     50,000.00

Purchase of Investment

(refer Investment Account)

     (5,000.00)

Sale of Equipment

(refer Equipment Account)

       1,000.00

Purchase of Equipment

(refer Equipment Account)

   (32,000.00)

     14,000.00

Cash Flow From Financing Activities

Dividends Paid

Cash Dividends paid as mentioned in the Question

   (35,000.00)

Notes Paid

(70000-62000)

     (8,000.00)

   (43,000.00)

Add: Opening Cash Balance

     51,000.00

Closing Cash Balance

     70,000.00

Equipment account

Debit

Credit

Opening Balance of Equipment

34000

By Depreciation

13000

To Bank for purchase

32000

By Bank

1000

By Loss

3000

By Balance C/d

49000

66000

66000

Investment account

Debit

Credit

Opening Balance

85000

To Bank for purchase

5000

By Bank

50000

To Profit on Sale

15000

By Balance C/d

55000

105000

105000

Cash flows from operating activities

$

Net income

    67,000.00

Adjustments for:

Add : Depreciation and amortization

(37000-28000) for Building & 13000 for Equipment

     22,000.00

Add: Income Tax Expense

     45,000.00

Add- Loss on Sale of Equipment

       3,000.00

Less- Gain on Sale of Investment

   (15,000.00)

Change in Accounts payable

(66000-60000)

       6,000.00

Change in Accounts Receivable

(122000-145000)

   (23,000.00)

Change in Inventory

(61000-75000)

   (14,000.00)

Less- Income Tax Paid

(10000+45000-12000)

   (43,000.00)

     48,000.00

Cash Flow From Investing Activities

Sale of Investment

(refer Investment Account)

     50,000.00

Purchase of Investment

(refer Investment Account)

     (5,000.00)

Sale of Equipment

(refer Equipment Account)

       1,000.00

Purchase of Equipment

(refer Equipment Account)

   (32,000.00)

     14,000.00

Cash Flow From Financing Activities

Dividends Paid

Cash Dividends paid as mentioned in the Question

   (35,000.00)

Notes Paid

(70000-62000)

     (8,000.00)

   (43,000.00)

Add: Opening Cash Balance

     51,000.00

Closing Cash Balance

     70,000.00

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