Question

1. 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		$62,550		$76,650
   Accounts receivable (net)		96,110		103,330
   Inventories		137,300		128,070
   Prepaid expenses		5,590		3,880
   Equipment		279,680		229,460
   Accumulated depreciation-equipment		(72,720)		(56,270)
   	Total assets	$508,510		$485,120
   Liabilities and Stockholders' Equity
   Accounts payable (merchandise creditors)		$106,790		$101,390
   Mortgage note payable		0		145,540
   Common stock, $1 par		16,000		10,000
   Paid-in capital: Excess of issue price over par-common stock		239,000		137,000
   Retained earnings		146,720		91,190
   	Total liabilities and stockholders’ equity	$508,510		$485,120

   Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:

   1. Net income, $142,160.
   2. Depreciation reported on the income statement, $35,500.
   3. Equipment was purchased at a cost of $69,270, and fully depreciated equipment costing $19,050 was discarded, with no salvage realized.
   4. The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
   5. 6,000 shares of common stock were issued at $18 for cash.
   6. Cash dividends declared and paid, $86,630.

   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 1