Question

The Murdock Corporation
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash flows from Operating Activities:
Net Income		$         50,000
Adjustments to reconcile Net Income to
Net Cash provided by operations
Depreciation Expense	$     53,000
Gain on Sale of Debt securities	$     (4,500)
Gain on Sale of Equipment	$       1,000
Increase in Accounts Receivables	$   (11,750)
increase in Inventory	$   (20,000)
Decrease in Prepaid Insurance	$          500
Decrease in Accounts Payable	$   (72,330)
Decrease in Salaries Payable	$     (4,500)
Decrease in Notes Payable (Current)	$   (50,000)	$      (110,580)
Net Cash Used by Operating Activities		$        (60,580)
Cash Flows from Investing Activities
Sale of Equipment	$       6,000
Purchase of New Equipment	$ (145,000)
Sale of Debt Securities	$     74,000
Net Cash used by investing activities		$        (65,000)
Cash Flows from Financing Activities
Issue of Bonds Payable	$   200,000
Payment of Dividends	$   (20,000)
Net Cash Provided by Financing Activities		$       180,000
Net Increase in Cash		$         54,420
Cash Balance at Beginning of Year		$         22,955
Cash Balance at End of Year		$         77,375

As the statement of cash flow for 2018 in a good form using the indirect method for cash flows from operating activities have been made, create a cash flow worksheet to show that this is correct.

Answer 1

The Murdock Corporation
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash flows from Operating Activities:
Net Income			$50,000	a
Adjustments to reconcile Net Income to
Net Cash provided by operations
Depreciation Expense	$     53,000	b
Gain on Sale of Debt securities	$     (4,500)	c
Gain on Sale of Equipment	$ (1,000)	d
Increase in Accounts Receivables	$   (11,750)	f
increase in Inventory	$   (20,000)	g
Decrease in Prepaid Insurance	$          500	h
Decrease in Accounts Payable	$   (72,330)	i
Decrease in Salaries Payable	$     (4,500)	j
Decrease in Notes Payable (Current)	$   (50,000)	k	$      (110,580)
Net Cash Used by Operating Activities			$        (60,580)
Cash Flows from Investing Activities
Sale of Equipment	$       6,000	d
Purchase of New Equipment	$ (145,000)	e
Sale of Debt Securities	$     74,000	c
Net Cash used by investing activities			$        (65,000)
Cash Flows from Financing Activities
Issue of Bonds Payable	$   200,000	l
Payment of Dividends	$   (20,000)	m
Net Cash Provided by Financing Activities			$       180,000
Net Increase in Cash			$         54,420	n
Cash Balance at Beginning of Year			$         22,955
Cash Balance at End of Year			$         77,375
The Murdock Corporation
Statement of Cash Flows worksheet
For the Year Ended December 31, 2018
Assets	2,017		Debit		Credit		2018
Cash	22,955		54,420	n			77,375
Available for sale debt securities	85,000				69,500	c	15,500
Accounts Receivable	68,250		11,750	f			80,000
Inventory	145,000		20,000	g			165,000
Preapid Insurance	2,000				500	h	1,500
Land, Building and Equipment	1,125,000		145,000	e	20,000	d	1,250,000
Less: Acc. Depreciation	-572,000		15,000	d	53,000	b	-610,000
Total Assets	876,205						979,375
Accounts payable	148,670		72,330	i			76,340
Salaries payable	24,500		4,500	j			20,000
Notes payable	75,000		50,000	k			25,000
Bonds payable	-				200,000	l	200,000
Common stock	300,000						300,000
Retained earnings	328,035		20,000	m	50,000	a	358,035
Total liabilities	876,205						979,375
			393,000		393,000