Question

The Murdock Corporation reported the following balance sheet data for 2018 and 2017:
  

	2018				2017
Cash	$	96,245			$	33,155
Available-for-sale debt securities (not cash equivalents)		24,000				102,000
Accounts receivable		97,000				83,550
Inventory		182,000				160,300
Prepaid insurance		3,030				3,700
Land, buildings, and equipment		1,284,000				1,142,000
Accumulated depreciation		(627,000	)			(589,000	)
Total assets	$	1,059,275			$	935,705
Accounts payable	$	91,640			$	165,670
Salaries payable		26,800				33,000
Notes payable (current)		40,300				92,000
Bonds payable		217,000				0
Common stock		300,000				300,000
Retained earnings		383,535				345,035
Total liabilities and shareholders' equity	$	1,059,275			$	935,705

Required:
Prepare a statement of cash flows for 2018 in good form using the indirect method for cash flows from operating activities. (Amounts to be deducted should be indicated with a minus sign.)
  

  
Additional information for 2018:

• (1.) Sold available-for-sale debt securities costing $78,000 for $84,200.
• (2.) Equipment costing $20,000 with a book value of $6,700 was sold for $8,550.
• (3.) Issued 6% bonds payable at face value, $217,000.
• (4.) Purchased new equipment for $162,000 cash.
• (5.) Paid cash dividends of $28,500.
• (6.) Net income was $67,000.

Answer 1

Cash Flow Statement
Cashflows from Operating activities:
Net Income for the year		67000
Adjustment requird for reconciliation
Depreciation expense		51300
gain on sale of investment		-6200
Gain on sale of equipment		-1850
Increase in Accounts receivable		-13450
Increase in inventory			-21700
Decrease in Prepaid insurance		670
Decrease in Accounts payable		-74030
Decrease in Salaries payable		-6200
Net cash used in operating activities		-4460
Cash flows from Investing activitis
Sale of investment			84200
Purchase of equipment		-162000
Sale of equipment			8550
Net cash used in investing activities		-69250
Cash flows from Financing activities:
Repayment of short term notes		-51700
Issuance of bonds payable		217000
Dividend paid			-28500
Net cash provided from Financing activities		136800
Net Increase in cash				63090
Beginning balance of cash			33155
Ending balance of cash			96245