Question

The balance sheet for Plasma Screens Corporation, along with additional information, are provided below: PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017 2018 2017   Assets:   Current assets:       Cash $ 141,050    $ 151,500          Accounts receivable 77,200    91,000          Inventory 93,000    78,200          Prepaid rent 3,600    1,800      Long-term assets:       Land 470,000    470,000          Equipment 768,000    660,000          Accumulated depreciation (424,000)   (264,000)             Total assets $ 1,128,850    $ 1,188,500      Liabilities and Stockholders' Equity:   Current liabilities:       Accounts payable $ 97,000    $ 83,200          Interest payable 6,750    13,500          Income tax payable 7,600    4,800      Long-term liabilities:       Notes payable 112,500    225,000      Stockholders' equity:       Common stock 690,000    690,000          Retained earnings 215,000    172,000             Total liabilities and stockholders' equity $ 1,128,850    $ 1,188,500

The balance sheet for Plasma Screens Corporation, along with additional information, are provided above.

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Additional Information for 2018:

1. Net income is $67,000.

2. The company purchases $108,000 in equipment.

3. Depreciation expense is $160,000.

4. The company repays $112,500 in notes payable.

5 .The company declares and pays a cash dividend of $24,000.

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Required:

Prepare the statement of cash flows using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

Answer 1

	Statement of Cash Flows
	For the Year Ended December 31, 2018
Cash Flows from Operating Activities:
Net income	67000
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation expense	160000
Decrease in accounts receivable	13800
Increase in inventory	-14800
Increase in prepaid rent	-1800
Increase in accounts payable	13800
Decrease in interest payable	-6750
Increase in income tax payable	2800
Net cash flows from operating activities		234050
Cash Flows from Investing Activities:
Purchase of equipment	-108000
Net cash flows from investing activities		-108000
Cash Flows from Financing Activities:
Payment of notes payable	-112500
Payment of cash dividends	-24000
Net cash flows from financing activities		-136500
Net increase (decrease) in cash		-10450
Cash at the beginning of the period		151500
Cash at the end of the period		141050