Question

Exercise 11-10A Prepare a statement of cash flows—indirect method (LO11-3, 11-4, 11-5)

The balance sheets for Plasma Screens Corporation, along with additional information, are provided below:

PLASMA SCREENS CORPORATION Balance Sheets December 31, 2021 and 2020
	2021				2020
Assets
Current assets:
Cash	$	144,850			$	156,500
Accounts receivable		76,400				90,000
Inventory		91,000				76,400
Prepaid rent		3,200				1,600
Long-term assets:
Land		460,000				460,000
Equipment		756,000				650,000
Accumulated depreciation		(418,000	)			(260,000	)
Total assets	$	1,113,450			$	1,174,500
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	95,000			$	81,400
Interest payable		6,750				13,500
Income tax payable		7,200				4,600
Long-term liabilities:
Notes payable		112,500				225,000
Stockholders' equity:
Common stock		680,000				680,000
Retained earnings		212,000				170,000
Total liabilities and stockholders' equity	$	1,113,450			$	1,174,500

Additional Information for 2021:

1. Net income is $65,000.
2. The company purchases $106,000 in equipment.
3. Depreciation expense is $158,000.
4. The company repays $112,500 in notes payable.
5. The company declares and pays a cash dividend of $23,000.

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

Answer 1

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