Question

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, 20Y8Dec. 31, 20Y7

Assets  

Cash$77,900 $95,460

Accounts receivable (net)119,700 128,690

Inventories171,000 159,520

Prepaid expenses6,970 4,830

Equipment348,330 285,790

Accumulated depreciation-equipment(90,570) (70,090)

Total assets$633,330 $604,200

   

Liabilities and Stockholders' Equity  

Accounts payable (merchandise creditors)$133,000 $126,280

Mortgage note payable0 181,260

Common stock, $1 par21,000 13,000

Paid-in capital in excess of par-common stock306,000 170,000

Retained earnings173,330 113,660

Total liabilities and stockholders’ equity$633,330 $604,200

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

Net income, $152,760.

Depreciation reported on the income statement, $44,200.

Equipment was purchased at a cost of $86,260 and fully depreciated equipment costing $23,720 was discarded, with no salvage realized.

The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.

8,000 shares of common stock were issued at $18 for cash.

Cash dividends declared and paid, $93,090.

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 outflows, 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 (used for) 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 (used for) investing activities:

$

Net cash flow used for investing activities

Cash flows from (used for) financing activities:

$

Net cash flow used for financing activities

$

Cash balance, January 1, 20Y8

Cash balance, December 31, 20Y8$

Answer 1

Answer-

YELLOW DOG ENTERPRISES
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER 20Y8
Particulars		Amount
		$
Cash flow from operating activities
Net Income		152760
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		44200
Change in operating assets & liabilities
Decrease in accounts receivable		8990
Increase in inventories		-11480
Increase in prepaid expenses		-2140
Increase in accounts payable		6720
Net cash flow from operating activities (a)		199050
Cash Flow from Investing activities
Cash paid for equipment		-86260
Net cash flow (used for) Investing activities (b)		-86260
Cash Flow from Financing activities
Cash paid to retire mortgage note payable		-181260
Cash received from sale of common stock		144000
Cash paid for dividends		-93090
Net cash flow (used for) Financing activities (c)		-130350
Net Change in cash c=a+b+c		-17560
Cash at the beginning of the year		95460
Cash at the end of the year		77900