In: Accounting
CAROLINA CORPORATION
Comparative Statements of Financial Position
December 31 2014 2013
Cash ..................................................... $ 43,000 $ 24,000
Accounts receivable, net .......................... 35,000 38,000
Inventory ............................................... 114,000 82,000
Land ...................................................... 120,000 190,000
Building ................................................. 200,000 200,000
Accumulated depreciation ......................... (50,000) (40,000)
Equipment ............................................. 1,030,000 600,000
Accumulated depreciation ......................... (118,000) (94,000)
$1,374,000 $1,000,000
Accounts payable .................................... $ 115,000 $ 100,000
4% Bonds payable .................................. 320,000 -0-
Common shares ...................................... 750,000 750,000
Retained earnings ................................... 189,000 150,000
$1,374,000 $1,000,000
Additional data:
1. Net income for the year was $84,000.
2. Cash dividends were paid.
3. Land was sold for $80,000.
4. Old equipment was sold for $70,000. This equipment had cost $150,000 and had accumulated depreciation of $60,000 to date of sale. New equipment was purchased to replace it.
Instructions: Prepare a statement of cash flows for calendar 2014, using the indirect method.
CAROLINA CORPORATION | ||||
Statement of Cash Flows | ||||
For the Year Ended December 31, 2014 | ||||
Cash flows from operating activities: | ||||
Net income | 84000 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation expense | 94000 | |||
Gain on sale of Land | -10000 | |||
Loss on sale of Equipment | 20000 | |||
Decrease in accounts receivable | 3000 | |||
Increase in merchandise inventory | -32000 | |||
Increase in accounts payable | 15000 | |||
90000 | ||||
Net cash provided by operating activities | 174000 | |||
Cash flows from investing activities: | ||||
Cash payments to purchase Equipment | -580000 | |||
Proceeds from sale of Equipment | 70000 | |||
Proceeds from sale of Land | 80000 | |||
Net cash used in investing activities | -430000 | |||
Cash flows from financing activities: | ||||
Cash payments for dividends | -45000 | |||
Proceeds from Bonds payable | 320000 | |||
Net cash provided by financing activities | 275000 | |||
Net increase in cash during the year | 19000 | |||
Cash balance, January 1 | 24000 | |||
Cash balance, December 31 | 43000 | |||