Question

Keeper Corporation’s income statement for the year ended June 30, 2014, and its comparative balance sheets for June 30, 2014 and 2013 follow.

Keeper Corporation Income Statement For the Year Ended June 30, 2014
Sales		$ 234,000
Cost of goods sold		156,000
Gross margin		$ 78,000
Operating expenses		45,000
Operating income		$ 33,000
Interest expense		2,800
Income before income taxes		$ 30,200
Income taxes expense		12,300
Net income		$ 17,900

Keeper Corporation Comparative Balance Sheets June 30, 2014 and 2013
		2014		2013
Assets
Cash		$ 69,900		$ 12,500
Accounts receivable (net)		21,000		26,000
Inventory		43,400		48,400
Prepaid expenses		3,200		2,600
Furniture		55,000		60,000
Accumulated depreciation—furniture		(9,000)		(5,000)
Total asset		$183,500		$144,500
Liabilities and Stockholders’ Equity
Accounts payable		$ 13,000		$ 14,000
Income taxes payable		1,200		1,800
Notes payable (long-term)		37,000		35,000
Common stock, $10 par value		115,000		90,000
Retained earnings		17,300		3,700
Total liabilities and stockholders’ equity		$183,500		$144,500

Keeper issued a $22,000 note payable for purchase of furniture; sold furniture that cost $27,000 with accumulated depreciation of $15,300 for its carrying value ; recorded depreciation on the furniture for the year, $19,300; repaid a note in the amount of $20,000; issued $25,000 of common stock at par value; and paid dividends of $4,300.

Prepare Keeper’s statement of cash flows for the year 2014 using the indirect method. Use the minus sign to indicate cash outflows or a decrease in cash.

Answer 1

Keeper’s
Cash flow statement for the Year 2014 (indirect method)
Cash flow from Operating activities
Net Income		$17,900.00
Adjustments to net income
Depreciation	$19,300.00
Decrease in Accounts Receivables	$5,000.00
Decrease in Inventory	$5,000.00
Increase in prepaid expenses	-$600.00
Decrease in Accounts Payable	-$1,000.00
Decrease in Income Tax payable	-$600.00	$27,100.00
Net Cash available from Operating activities		$45,000.00
Cash flow from Investing activities
Sale of furniture	$11,700.00
Net Cash used for Investing activities		$11,700.00
Cash flow from Financing activities
Note repaid	-$20,000.00
Issue of common stock	$25,000.00
Dividend paid	-$4,300.00
Net Cash available from financing activities		$700.00
Net Cash surplus / (deficit)		$57,400.00
Add : Cash balance 2013		$12,500.00
Cash balance 2014		$69,900.00