Question

The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows:

1		Dec. 31, 20Y8	Dec. 31, 20Y7
2	Assets
3	Cash	$146,190.00	$179,070.00
4	Accounts receivable (net)	224,940.00	241,100.00
5	Merchandise inventory	322,390.00	299,700.00
6	Prepaid expenses	12,670.00	9,430.00
7	Equipment	655,160.00	537,730.00
8	Accumulated depreciation	(170,790.00)	(131,900.00)
9	Total assets	$1,190,560.00	$1,135,130.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$250,640.00	$237,300.00
12	Mortgage note payable	0.00	336,600.00
13	Common stock, $10 par	73,000.00	23,000.00
14	Paid-in capital: Excess of issue price over par—common stock	500,000.00	310,000.00
15	Retained earnings	366,920.00	228,230.00
16	Total liabilities and stockholders’ equity	$1,190,560.00	$1,135,130.00

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:

A.	Net income, $291,590.
B.	Depreciation reported on the income statement, $83,790.
C.	Equipment was purchased at a cost of $162,330 and fully depreciated equipment costing $44,900 was discarded, with no salvage realized.
D.	10,000 shares of common stock were issued at $24 for cash.
E.	The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
F.	Cash dividends declared and paid, $152,900.

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Labels and Amount Descriptions

Labels and Amount Descriptions
Cash used for dividends
Cash used for equipment
Cash used for merchandise
Cash used for purchase of land
Cash used to retire mortgage note payable
Cash from customers
Cash from sale of common stock
December 31, 20Y8
Decrease in cash
Decrease in merchandise inventory
Decrease in accounts payable
Decrease in accounts receivable
Decrease in prepaid expenses
Depreciation
For the Year Ended December 31, 20Y8
Gain on disposal of equipment
Gain on sale of investments
Increase in accounts payable
Increase in accounts receivable
Increase in cash
Increase in merchandise inventory
Increase in prepaid expenses
Loss on disposal of equipment
Loss on sale of investments
Net cash flow from financing activities
Net cash flow from investing activities
Net cash flow from operating activities
Net cash flow used for financing activities
Net cash flow used for investing activities
Net cash flow used for operating activities
Net income
Net loss

Statement of Cash Flows

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Yellow Dog Enterprises Inc.

Statement of Cash Flows

1	Cash flows from operating activities:
2
3	Adjustments to reconcile net income to net cash flow from operating activities:
4
5	Changes in current operating assets and liabilities:
6
7
8
9
10
11
12	Cash flows from (used for) investing activities:
13
14
15
16	Cash flows from (used for) financing activities:
17
18
19
20
21
22	Cash at the beginning of the year
23	Cash at the end of the year

Answer 1

Answer-

YELLOW DOG ENTERPRISES
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER 20Y8
Particulars		Amount
		$
Cash flow from operating activities
Net Income		291590
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		83790
Change in operating assets & liabilities
Decrease in accounts receivable		16160
Increase in merchandise inventory		-22690
Increase in prepaid expenses		-3240
Increase in accounts payable		13340
Net cash flow from operating activities (a)		378950
Cash Flow from Investing activities
Cash used for equipment		-162330
Net cash flow (used for) Investing activities (b)		-162330
Cash Flow from Financing activities
Cash used to retire mortgage note payable		-336600
Cash from sale of common stock		240000
Cash used for dividends		-152900
Net cash flow (used for) Financing activities (c)		-249500
Net Change in cash c=a+b+c		-32880
Cash at the beginning of the year		179070
Cash at the end of the year		146190