In: Accounting
Statement of Cash Flows—Indirect Method
The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows:
Dec. 31, 20Y8 Dec. 31, 20Y7
Assets
Cash $61,880 $76,070
Accounts receivable (net) 95,080 102,550
Inventories 135,830 127,100
Prepaid expenses 5,530 3,850
Equipment 276,690 227,720
Accumulated depreciation-equipment (71,940) (55,850)
Total assets $503,070 $481,440
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors) $105,640 $100,620
Mortgage note payable 0 144,430
Common stock, $1 par 16,000 10,000
Paid-in capital: Excess of issue price over par-common stock
226,000 136,000
Retained earnings 155,430 90,390
Total liabilities and stockholders’ equity $503,070 $481,440
Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:
Net income, $166,500.
Depreciation reported on the income statement, $34,990.
Equipment was purchased at a cost of $67,870, and fully depreciated
equipment costing $18,900 was discarded, with no salvage
realized.
The mortgage note payable was not due for six years, but the terms
permitted earlier payment without penalty.
6,000 shares of common stock were issued at $16 for cash.
Cash dividends declared and paid, $101,460.
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, or any negative adjustments.
Yellow Dog Enterprises Inc.
Statement of Cash Flows
For the Year Ended December 31, 20Y8
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 used for financing activities
$
Cash at the beginning of the year
Cash at the end of the year $
Answer:-
Yellow Dog Enterprises | ||
Statement of Cash Flow (Using Indirect Method) | ||
For the year ended December 31,2018 | ||
Particulars | Amount | |
$ | ||
Cash flow from opreating activities | ||
Net Income | 166500 | |
Adjustments to reconcile net income to net cash provided by opreating activities | ||
Adjustment for non cash effects | ||
Depreciation | 34990 | |
Change in opreating assets & liabilities | ||
Decrease in accounts receiveble | 7470 | |
Increase in inventory | -8730 | |
Increase in prepaid expenses | -1680 | |
Increase in accounts payable | 5020 | |
Net cash flow from opreating activities (a) | 203570 | |
Cash Flow from Financing activities | ||
Mortagae notes paid | -144430 | |
Cash Dividend paid | -101460 | |
Common stock issued | 96000 | |
Net cash Flow from Financing activities (b) | -149890 | |
Cash Flow from Investing activities | ||
Purchase of equipment | -67870 | |
Net cash Flow from Investing activities (c) | -67870 | |
Net Channge in cash c=a+b+c | -14190 | |
Beginning cash balance | 76070 | |
Closing cash balance | 61880 |