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In: Accounting

The balance sheets of Dolan Company, for December 31, 2014 and 2013, are as follows: 2014...

The balance sheets of Dolan Company, for December 31, 2014 and 2013, are as follows:

2014

2013

Cash

$  68,000

$  42,500

Accounts receivable (net)

61,000

70,200

Inventories

121,000

105,000

Investments

.....

100,000

Equipment

515,000

425,000

Accumulated depreciation-equipment

(153,000)

(175,000)

$612,000

$567,700

Accounts payable

$  59,750

$  47,250

Bonds payable, due 2010

.....

75,000

Common stock, $20 par

375,000

325,000

Premium on common stock

50,000

25,000

Retained earnings

  127,250

    95,450

$612,000

$567,700

Additional information:

(a)

Net income, $71,800.

(b)

Depreciation reported on income statement, $38,000.

(c)

Fully depreciated equipment costing $60,000 was scrapped, no salvage, and equipment was purchased for $150,000.

(d)

Bonds payable for $75,000 were retired by payment at their face amount.

(e)

2,500 shares of common stock were issued at $30 for cash.

(f)

Cash dividends declared and paid, $40,000.

(g)

Investments of $100,000 were sold for $125,000.

Required: Prepare a statement of cash flows using the indirect method.

Solutions

Expert Solution

Statement of Cash Flows
For the Year Ended December 31, 2014
Cash Flows from Operating Activities:
Net income 71800
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense 38000
Gain on Sale of investments -25000
Decrease in Accounts receivable 9200
Increase in inventory -16000
Increase in accounts payable 12500
18700
Net cash provided by operating activities 90500
Cash Flows from Investing Activities:
Purchase of Equipment -150000
Sale of Investments 125000
Net Cash used by Investing Activities -25000
Cash Flows from Financing Activities
Payment of Cash Dividends -40000
Redemption of Bonds Payable -75000
Issuance of Capital Stock 75000
Net Cash Used by Financing Activities -40000
Net Increase in Cash 25500
Cash at Beginning of Period 42500
Cash at End of Period 68000

ekkarill92 answered 1 year ago
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