Question

The Murdock Corporation reported the following balance sheet data for 2018 and 2017:
  

	2018				2017
Cash	$	82,925			$	25,955
Available-for-sale debt securities (not cash equivalents)		18,000				90,000
Accounts receivable		85,000				72,750
Inventory		170,000				149,500
Prepaid insurance		1,950				2,500
Land, buildings, and equipment		1,260,000				1,130,000
Accumulated depreciation		(615,000	)			(577,000	)
Total assets	$	1,002,875			$	893,705
Accounts payable	$	80,840			$	153,670
Salaries payable		22,000				27,000
Notes payable (current)		29,500				80,000
Bonds payable		205,000				0
Common stock		300,000				300,000
Retained earnings		365,535				333,035
Total liabilities and shareholders' equity	$	1,002,875			$	893,705

  
Additional information for 2018:

(1.) Sold available-for-sale debt securities costing $72,000 for $77,000.

(2.) Equipment costing $20,000 with a book value of $5,500 was sold for $6,750.

(3.) Issued 6% bonds payable at face value, $205,000.

(4.) Purchased new equipment for $150,000 cash.

(5.) Paid cash dividends of $22,500.

(6.) Net income was $55,000.

Required:
Prepare a statement of cash flows for 2018 in good form using the indirect method for cash flows from operating activities. (Amounts to be deducted should be indicated with a minus sign.)
  

MURDOCK CORPORATION Statement of Cash Flows For the Year Ended December 31, 2018 Cash flows from operating activities: Adjustments for noncash effects: Changes in operating assets and liabilities: Net cash flows from operating activities Cash flows from investing activities: Net cash flows from investing activities Cash flows from financing activities: Net cash flows from financing activities Cash balance, January 1 Cash balance, December 31

Answer 1

MURDOCK CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash flows from operating activities:
Net Income	$55,000.00
Less : Profit on sale of Debt Securities( $77000-$-72000)	-$5,000.00
Less : Profit on sale of Equipment ( $6750-$5500)	-$1,250.00
Adjustment for Non Cash Effect
Add : Depreciation	$52,500.00
Changes in Operating Assests & Liabilities
Less : Increase in A/C receivable	-$12,250.00
Less : Increase in Inventory	-$20,500.00
Add : Decrease in Prepaid Insurance	$550.00
Add : Decrease in A/c Payable	-$72,830.00
Add : Decrease in Salary Payable	-$5,000.00
Add : Decrease in Notes Payable	-$50,500.00
Net Cash from Operating Activities-(A)	-$59,280.00
Cash Flow from investing Actvites
Add :Sale of debt Seurities	$77,000.00
Less : Purchase of Land, Building and Equip	-$150,000.00
Add : Sale of Land, Building and Equip	$21,250.00
Less : Accumulated Depreciation of sale of Equipment	-$14,500.00
Net Cash Flow from investing Actvites- ( B)	-$66,250.00
Cash Flow from Financing Actvites
Less : Dividend Paid	-$22,500.00
Add : Bonds Payable	$205,000.00
Net Cash Flow from investing Actvites- ( C)	$182,500.00
Net Cash Flow( A+B+c)	$56,970.00
Opening Cash	$25,955.00
Closing Cash	$82,925.00