Question

P16-33A Preparing the statement of cash flows------indirect method

	2018	2017
Current Assets:
Cash	$99,400	$25,000
Accounts Receivable	64,100	69,700
Mechandise Inventory	83,000	75,000
Current Liabilities:
Accounts Payable	57,600	55,200
Income Tax Payable	14,800	16,800

Transaction Data for 2018:
Issuance of Common Stock for Cash	$38,000	Payment of notes payable	$46,100
Depreciation expense	24,000	Payment of cash dividends	50,000
Purchase of equipment with cash	74,000	Issuance of notes payable to borrow cash	62,000
Acquisition of land by issuing long-term notes payable	119,000	Gain on sale of building	4,500
Book value of building sold	54,000	Net income	68,500

Prepare Morganson's statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and financing activities.

Answer 1

Morganson's

Statement of Cash Flows

For the year ended December 31 2018

	$	$
Cash Flows from Operating Activities
Net Income		68,500
Adjutments to reconcile net income to net cash flows from operations
Depreciation Expense	24,000
Gain on Sale of Building	(4,500)
Decrease in Accounts Receivable	5,600
Increase in Merchandise Inventory	(8,000)
Increase in Accounts Payable	2,400
Decrease in Income Taxes Payable	(2,000)	17,500
Net Cash Flows from Operating Activities		86,000
Cash Flows from Investing Activities
Cash received from Sale of Building	58,500
Cash paid for Purchase of Equipment	(74,000)
Net Cash Flows used in Investing Activities		(15,500)
Cash Flows from Financing Activities
Cash received from issuance of Common Stock	38,000
Cash received from issue of Notes Payable	62,000
Cash paid to retire Notes Payable	(46,100)
Cash paid for Dividends	(50,000)
Net cash flows from Financing Activities		3,900
Net Increase ( Decrease) in Cash and Cash Equivalents		74,400
Beginning Cash and Cash Equivalents		25,000
Ending Cash and Cash Equivalents		99,400
Schedule of non-cash Investing and Financing Activity
Acquisition of land by issuance of long term notes payable		119,000