Question

The following information is available for Metlock Corporation for the year ended December 31, 2022:

Collection of principal on long-term loan to a supplier		$33,000
Acquisition of equipment for cash		14,000
Proceeds from the sale of long-term investment at book value		24,900
Issuance of common stock for cash		20,400
Depreciation expense		29,200
Redemption of bonds payable at carrying (book) value		37,200
Payment of cash dividends		6,700
Net income		38,200
Purchase of land by issuing bonds payable		48,500

In addition, the following information is available from the comparative balance sheet for Metlock at the end of 2022 and 2021:

		2022		2021
Cash		$183,700		$96,500
Accounts receivable (net)		25,700		17,600
Prepaid insurance		19,200		14,700
Total current assets		$228,600		$128,800
Accounts payable		$38,000		$24,800
Salaries and wages payable		6,800		8,000
Total current liabilities		$44,800		$32,800

Prepare Metlock's statement of cash flows for the year ended December 31, 2022, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

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Workings- Indirect Method
Increase in Accounts Receivable	Amount $
Closing Balance	25,700.00
Less: Opening Balance	17,600.00
Increase in Accounts Receivable	8,100.00
Increase in Prepaid insurance
Closing Balance	19,200.00
Less: Opening Balance	14,700.00
Increase in Prepaid insurance	4,500.00
Increase in Accounts Payable
Closing Balance	38,000.00
Less: Opening Balance	24,800.00
Increase in Accounts Payable	13,200.00
Decrease in Salaries and wages payable
Closing Balance	6,800.00
Less: Opening Balance	8,000.00
Decrease in Salaries and wages payable	(1,200.00)

Metlock
Cashflow statement	Amount $	Amount $
Particulars
Net Income		38,200.00
Adjustment to reconcile Net Income to Net Cash
Add:
Depreciation Expense		29,200.00
Cash flow from Operations		67,400.00
Changes in Current Assets/Current Liabilities
Increase in Accounts Receivable	(8,100.00)
Increase in Prepaid insurance	(4,500.00)
Increase in Accounts Payable	13,200.00
Decrease in Salaries and wages payable	(1,200.00)	(600.00)
Net cash provided by operating activities		66,800.00
Cash flow from investing activities
Acquisition of equipment for cash	(14,000.00)
Proceeds from the sale of long-term investment at book value	24,900.00
Net cash use for investing activities		10,900.00
Cash flow from financing activities
Collection of principal on long-term loan to a supplier	33,000.00
Issuance of common stock for cash	20,400.00
Redemption of bonds payable at carrying (book) value	(37,200.00)
Payment of cash dividends	(6,700.00)
Net cash used for financing activities		9,500.00
Net Increase/(Decrease) in cash		87,200.00
Cash Balance, beginning		96,500.00
Cash Balance, ending		183,700.00
Non cash activities
Purchase of land by issuing bonds payable		48,500.00