Question

Selected financial information for the Adelphi Company for the fiscal years ended December 31, 2018 and 2017 follows. Prepare a cash flow statement using the indirect method. Properly title the statement.

	2018	2017
Net income	$142,500	$162,000
Depreciation Expense	42,000	35,000
Purchase of Plant Assets	135,000	125,000
Disposal of Plant Assets	40,000	50,000
Gain (Loss) on Disposal of Plant Assets	(10,000)	5,000
Accounts Receivable Balance	64,500	58,000
Accounts Payable Balance	42,000	39,000
Interest Expense	8,000	6,000
Income Taxes Paid	35,000	28,000
Dividends Paid	30,000	25,000
Common Stock Issued for Cash	20,000	0

Answer 1

Solution:

Adelphi Company
Statement of Cash Flows
For the Year ended December 31, 2018
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income		$1,42,500.00
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation expense	$42,000.00
Loss on Disposal of Plant assets	$10,000.00
Increase in Accounts Receivables ($58000-$64500)	-$6,500.00
Increase In Accounts Payable ($42000-$39000)	$3,000.00
Total Adjustments		$48,500.00
Net Cash Flow From Operating Activites (A)		$1,91,000.00
Cash Flow from Investing Activities:
Purchase of Plant Assets	-$1,35,000.00
Disposal of Plant Assets	$40,000.00
Net Cash Flow From Investing Activities (B)		-$95,000.00
Cash Flow from Financing Activities:
Issue Proceeds of Common stock	$20,000.00
Dividend paid	-$30,000.00
Net Cash Flow From Financing Activities (C)		-$10,000.00
Total Cash flow from all activities (A+B+C) [Net change in Cash]		$86,000.00