Question

The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows:

1		Dec. 31, 20Y8	Dec. 31, 20Y7
2	Assets
3	Cash	$146,480.00	$179,640.00
4	Accounts receivable (net)	225,010.00	241,920.00
5	Merchandise inventory	321,600.00	298,870.00
6	Prepaid expenses	13,030.00	10,420.00
7	Equipment	654,380.00	537,900.00
8	Accumulated depreciation	(169,970.00)	(133,130.00)
9	Total assets	$1,190,530.00	$1,135,620.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$250,960.00	$236,720.00
12	Mortgage note payable	0.00	335,410.00
13	Common stock, $10 par	75,000.00	25,000.00
14	Paid-in capital: Excess of issue price over par—common stock	440,000.00	310,000.00
15	Retained earnings	424,570.00	228,490.00
16	Total liabilities and stockholders’ equity	$1,190,530.00	$1,135,620.00

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:

A.	Net income, $348,560.
B.	Depreciation reported on the income statement, $82,480.
C.	Equipment was purchased at a cost of $162,120 and fully depreciated equipment costing $45,640 was discarded, with no salvage realized.
D.	10,000 shares of common stock were issued at $18 for cash.
E.	The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
F.	Cash dividends declared and paid, $152,480.

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Labels and Amount Descriptions
Cash used for dividends
Cash used for equipment
Cash used for merchandise
Cash used for purchase of land
Cash used to retire mortgage note payable
Cash from customers
Cash from sale of common stock
December 31, 20Y8
Decrease in cash
Decrease in merchandise inventory
Decrease in accounts payable
Decrease in accounts receivable
Decrease in prepaid expenses
Depreciation
For the Year Ended December 31, 20Y8
Gain on disposal of equipment
Gain on sale of investments
Increase in accounts payable
Increase in accounts receivable
Increase in cash
Increase in merchandise inventory
Increase in prepaid expenses
Loss on disposal of equipment
Loss on sale of investments
Net cash flow from financing activities
Net cash flow from investing activities
Net cash flow from operating activities
Net cash flow used for financing activities
Net cash flow used for investing activities
Net cash flow used for operating activities
Net income
Net loss

Answer 1

Answer-

YELLOW DOG ENTERPRISES
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER 20Y8
Particulars		Amount
		$
Cash flow from operating activities
Net Income		348560
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		82480
Change in operating assets & liabilities
Decrease in accounts receivable		16910
Increase in inventory		-22730
Increase in prepaid expenses		-2610
Increase in accounts payable		14240
Net cash flow from operating activities (a)		436850
Cash Flow from Investing activities
New equipment purchased		-162120
Net cash Flow from Investing activities (b)		-162120
Cash Flow from Financing activities
Cash dividends paid		-152480
Common stock issued		180000
Mortgage note payable paid		-335410
Net cash Flow from Financing activities (c)		-307890
Net Change in cash c=a+b+c		-33160
Beginning cash balance		179640
Closing cash balance		146480