Question
In: Accounting
The following information is available for the Roots Heritage Corp. for the year ended Dec. 31,...
- The following information is available for the Roots Heritage Corp. for the year ended Dec. 31, 2015:
Collection of principal on long term loan to a supplier …… …………… $35,000
Purchase of equipment for cash … …………………………………… 10,000
Proceeds from sale of long-term investment at book value …………….. 27,000
Issuance of common stock for cash …………………………………….. 20,000
Depreciation expense for the year ………………………………… 25,000
Redemption of bonds at carrying value …………………………. 24,000
Payment of cash dividends ……………………………………………… 9,000
Net income ………………………………………………………………. 30,000
Purchase of land by issuing bonds payable ……………………………… 40,000
In addition, the following information is available from the comparative balance sheet for 2015 & 2014:
2015 2014
Cash ………………………. $102,000 $ 14,000
Accounts receivable (net) … 20,000 15,000
Prepaid insurance ………… 17,000 13,000
Total current assets ………. $139,000 $ 42,000
Accounts payable ………… $ 25,000 $ 19,000
Salaries payable ………….. 4,000 7,000
Total current liabilities …… $ 29,000 $ 26,000
Required: Prepare a statement of cash flows using the indirect method
Solutions
Expert Solution
Solution
| Roots Heritage Corp | ||
| Statement of Cash Flows | ||
| For the Year Ended December 31, 2015 | ||
| Cash flows from operating activities: | ||
| Net income | $ 30,000.00 | |
| Adjustments to reconcile net income to | ||
| net cash provided by operating activities: | ||
| Depreciation expense | $ 25,000.00 | |
| Increase in prepaid insurance | $ (4,000.00) | |
| Increase in accounts payable | $ 6,000.00 | |
| Decrease in salaries payable | $ (3,000.00) | |
| Increase in accounts receivables | $ (5,000.00) | |
| $ 19,000.00 | ||
| Net cash from Operating Activities | $ 49,000.00 | |
| Cash flows from investing activities: | ||
| Purchase of Equipment | $ (10,000.00) | |
| Collection of long term loan | $ 35,000.00 | |
| Proceeds from sale of long-term investment | $ 27,000.00 | |
| Net cash from Investing Activities | $ 52,000.00 | |
| Cash flows from financing activities: | ||
| Redemption of bonds | $ (24,000.00) | |
| Dividends paid | $ (9,000.00) | |
| Issue of common stock | $ 20,000.00 | |
| Net cash from Financing Activities | $ (13,000.00) | |
| Net change in cash during the year | $ 88,000.00 | |
| Add: Beginning cash balance | $ 14,000.00 | |
| Ending cash balance | $ 102,000.00 | |
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