Question

The following information is available for Splish Brothers Inc. for the year ended December 31, 2022.

Beginning cash balance		$ 65,250
Accounts payable decrease		5,365
Depreciation expense		234,900
Accounts receivable increase		11,890
Inventory increase		15,950
Net income		411,945
Cash received for sale of land at book value		50,750
Cash dividends paid		17,400
Income taxes payable increase		6,815
Cash used to purchase building		419,050
Cash used to purchase treasury stock		37,700
Cash received from issuing bonds		290,000

Prepare a statement of cash flows using the indirect method.

Answer 1

Solution

Splish Brothers Inc.
Statement of Cash Flows
For the Year ended December 31st 2022
A. Cash Flows from Operating Activity
Net Income		$        411,945.00
Adjustments to reconcile net income to net cash flows from Operating Activities
Income statement items not affecting cash
Depreciation expense	$        234,900.00
Decrease in Accounts Payable	$           (5,365.00)
Increase in Inventory	$        (15,950.00)
Increase in Accounts Receivable	$        (11,890.00)
Increase in Income taxes payable	$             6,815.00
		$        208,510.00
Net cash flow from Operating activities		$        620,455.00
B. Cash flows from Investing Activities
Cash received for sale of land at book value	$           50,750.00
Cash used to purchase building	$      (419,050.00)
Net Cash Used in Investing activities		$     (368,300.00)
C. Cash Flows from Financing activities
Cash received from issuing bonds	$        290,000.00
Cash used to purchase treasury stock	$        (37,700.00)
Cash dividends paid	$        (17,400.00)
Net Cash Provided by Financing activities		$        234,900.00
Net Increase in Cash [A+B+C]		$        487,055.00
Cash at the beginning		$          65,250.00
Cash at the end		$        552,305.00