Question

Statement of Cash Flows (Indirect Method)
Use the following information regarding the Fremantle Corporation to prepare a statement of cash flows using the indirect method:

Accounts payable increase	$11,000
Accounts receivable increase	4,000
Accrued liabilities decrease	3,000
Amortization expense	26,000
Cash balance, January 1	22,000
Cash balance, December 31	117,000
Cash paid as dividends	49,000
Cash paid to purchase land	100,000
Cash paid to retire bonds payable at par	70,000
Cash received from issuance of common stock	75,000
Cash received from sale of equipment	17,000
Depreciation expense	69,000
Gain on sale of equipment	14,000
Inventory decrease	13,000
Net income	126,000
Prepaid expenses increase	2,000

Remember to use negative signs with answers when appropriate.

FREMANTLE CORPORATION Statement of Cash Flows For Year Ended December 31
Cash Flow from Operating Activities
Net Income	Answer
Add (deduct) items to convert net income to cash basis
Depreciation	Answer
Amortization	Answer
Gain on Sale of Equipment	Answer
Accounts Receivable Increase	Answer
Inventory Decrease	Answer
Prepaid Expenses Increase	Answer
Accounts Payable Increase	Answer
Accrued Liabilities Decrease	Answer
Cash Flow Provided by Operating Activities	Answer
Cash Flow from Investing Activities
Sale of Equipment	Answer
Purchase of Land	Answer
Cash Used by Investing Activities	Answer
Cash Flow from Financing Activities
Issuance of Common Stock	Answer
Retirement of Bonds Payable	Answer
Payment of Dividends	Answer
Cash Used by Financing Activities	Answer
Net Increase in Cash	Answer
Cash at Beginning of Year	Answer
Cash at End of Year	Answer

Answer 1

FREMANTLE CORPORATION
Statement of Cash Flows
For Year Ended December 31
Cash Flow from Operating Activities
Net Income	126000
Add (deduct) items to convert net income to cash basis
Depreciation	69000
Amortization	26000
Gain on Sale of Equipment	-14000
Accounts Receivable Increase	-4000
Inventory Decrease	13000
Prepaid Expenses Increase	-2000
Accounts Payable Increase	11000
Accrued Liabilities Decrease	-3000
Cash Flow Provided by Operating Activities	222000
Cash Flow from Investing Activities
Sale of Equipment	17000
Purchase of Land	-100000
Cash Used by Investing Activities	-83000
Cash Flow from Financing Activities
Issuance of Common Stock	75000
Retirement of Bonds Payable	-70000
Payment of Dividends	-49000
Cash Used by Financing Activities	-44000
Net Increase in Cash	95000
Cash at Beginning of Year	22000
Cash at End of Year	117000