Question

Question 1

The following items were gathered from Ledbetter Company’s general ledger:

Net income		$59,210
Loss on sale of equipment		13,260
Beginning cash balance		18,910
Purchase of new factory equipment		76,810
Proceeds from sale of equipment		28,300
Depreciation		9,710
Payment of cash dividends		20,460
Increase in accounts receivable		6,810
Proceeds from bank loan		26,000
Decrease in inventory		16,050
Increase in accounts payable		13,680
Increase in accrued liabilities		4,320

Using the indirect method, construct Ledbetter’s statement of cash flows. (Enter amounts that decrease cash using either a negative sign preceding the number e.g. -4,527 or parentheses e.g. (4,527).)

Answer 1

	Statement of Cash Flows
Cash Flows from Operating Activities:
Net income		59210
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	9710
Loss on sale of equipment	13260
Increase in accounts receivable	-6810
Decrease in inventory	16050
Increase in accounts payable	13680
Increase in accrued liabilities	4320
		50210
Net cash provided by operating activities		109420
Cash Flows from Investing Activities:
Purchase of new factory equipment	-76810
Proceeds from sale of equipment	28300
Net Cash used by Investing Activities		-48510
Cash Flows from Financing Activities
Payment of Cash Dividends	-20460
Proceeds from bank loan	26000
Net Cash Used by Financing Activities		5540
Net Increase in Cash		66450
Beginning cash balance		18910
Cash at End of Period		85360