Question

Use the following information regarding the Newcastle Corporation to prepare a statement of cash flows using the indirect method:

Accounts payable decrease	$9,100
Accounts receivable increase	12,740
Wages payable decrease	5,460
Amortization expense	29,120
Cash balance, January 1	54,600
Cash balance, December 31	12,740
Cash paid as dividends	10,920
Cash paid to purchase land	182,000
Cash paid to retire bonds payable at par	136,500
Cash received from issuance of common stock	81,900
Cash received from sale of equipment	21,840
Depreciation expense	70,980
Gain on sale of equipment	25,480
Inventory increase	23,660
Net income	174,720
Prepaid expenses increase	14,560

Answer 1

--Requirement: Cash FLow Statement, Indirect Method.
Positive = Cash Provided,
Negative = Cash used

Cash Flows from Operating activities
Net income	$174,720
Adjustments to reconcile Net Income to net cash provided by Operating activities
Accounts payable decrease	($9,100)
Accounts receivable increase	($12,740)
Wages payable decrease	($5,460)
Amortization expense	$29,120
Depreciation expense	$70,980
Gain on sale of equipment	($25,480)
Inventory increase	($23,660)
Prepaid expenses increase	($14,560)
Net Cash Flows from Operating activities		$183,820
Cash Flows from Investing activities
Cash paid to purchase land	($182,000)
Cash received from sale of equipment	$21,840
Net Cash flows from Investing activies		($160,160)
Cash Flows from Financing Activities
Cash paid as dividends	($10,920)
Cash paid to retire bonds payable at par	($136,500)
Cash received from issuance of common stock	$81,900
Net Cash Flows from Financing activities		($65,520)
Net Increase (Decrease) in Cash		($41,860)
Cash balance, January 1		$54,600
Cash balance, December 31		$12,740