In: Accounting
Exercise 11-10 Prepare a statement of cash flows-indirect method (LO11-2, 11-3)
The balance sheet for Plasma Screens Corporation, along with
additional information, are provided below:
PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017 |
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2018 | 2017 | |||
Assets: | ||||
Current assets: | ||||
Cash | $ | 108,900 | $ | 126,800 |
Accounts receivable | 82,000 | 97,000 | ||
Inventory | 105,000 | 89,000 | ||
Prepaid rent | 6,000 | 3,000 | ||
Long-term assets: | ||||
Land | 530,000 | 530,000 | ||
Equipment | 830,000 | 720,000 | ||
Accumulated depreciation | (438,000) | (288,000) | ||
Total assets | $ | 1,223,900 | $ | 1,277,800 |
Liabilities and Stockholders' Equity: | ||||
Current liabilities: | ||||
Accounts payable | $ | 109,000 | $ | 94,000 |
Interest payable | 6,900 | 13,800 | ||
Income tax payable | 10,000 | 6,000 | ||
Long-term liabilities: | ||||
Notes payable | 115,000 | 230,000 | ||
Stockholders' equity: | ||||
Common stock | 750,000 | 750,000 | ||
Retained earnings | 233,000 | 184,000 | ||
Total liabilities and stockholders' equity | $ | 1,223,900 | $ | 1,277,800 |
Additional Information for 2018:
1. Net income is $79,000.
2. The company purchases $110,000 in equipment.
3. Depreciation expense is $150,000.
4. The company repays $115,000 in notes payable.
5. The company declares and pays a cash dividend of
$30,000.
Required:
Prepare the statement of cash flows using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)
Cash flow from Operating activities | ||||||||
Net income | 79,000 | |||||||
Adjustments to reconcile net income to net | ||||||||
cash from Operating activities | ||||||||
Depreciation expense | 150,000 | |||||||
Decrease in accounts receivable | 15000 | |||||||
increase in inventory | -16000 | |||||||
increase in prepaid rent | -3000 | |||||||
increase in accounts payable | 15000 | |||||||
decrease in interest payable | -6900 | |||||||
increase in income taxes payable | 4000 | |||||||
net cash from operating activities | 237,100 | |||||||
Cash flows from Investing Activities | ||||||||
Purchase of Equipment | -110,000 | |||||||
Net cash flows from investing activities | -110,000 | |||||||
Cash flows from financing activitiies | ||||||||
payment of notes payable | -115,000 | |||||||
payment of cash dividends | -30,000 | |||||||
Net cash flow from financing activities | -145,000 | |||||||
Net increase (decrease) in cash | -17,900 | |||||||
cash at the beginning of the period | 126,800 | |||||||
Cash at the end of the period | 108,900 | |||||||