Question

Shown below are comparative balance sheets for Shamrock Company.

Shamrock Company Comparative Balance Sheets December 31
Assets		2022			2021
Cash		$ 136,000			$ 44,000
Accounts receivable		176,000			152,000
Inventory		334,000			378,000
Land		160,000			200,000
Equipment		520,000			400,000
Accumulated depreciation—equipment		(132,000	)		(64,000	)
Total		$1,194,000			$1,110,000
Liabilities and Stockholders’ Equity
Accounts payable		$ 78,000			$ 86,000
Bonds payable		300,000			400,000
Common stock ($1 par)		432,000			348,000
Retained earnings		384,000			276,000
Total		$1,194,000			$1,110,000

Additional information:

1.		Net income for 2022 was $186,000.
2.		Depreciation expense was $68,000.
3.		Cash dividends of $78,000 were declared and paid.
4.		Bonds payable amounting to $100,000 were redeemed for cash $100,000.
5.		Common stock was issued for $84,000 cash.
6.		No equipment was sold during 2022.
7.		Land was sold for its book value.

Prepare a statement of cash flows for 2022 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -45,000, or in parenthesis e.g. (45,000)).

Answer 1

Statement of Cash Flows
For the Year Ended December 31, 2022
Cash Flows from Operating Activities:
Net income		186000
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	68000
Increase in Accounts Receivable	-24000
Decrease in inventory	44000
Decrease in Accounts Payable	-8000
		80000
Net cash provided by operating activities		266000
Cash Flows from Investing Activities:
Sale of Land	40000
Purchase of Equipment	-120000
Net Cash used by Investing Activities		-80000
Cash Flows from Financing Activities
Payment of Cash Dividends	-78000
Issuance of Common Stock	84000
Redemption of Bonds	-100000
Net Cash Used by Financing Activities		-94000
Net Increase in Cash		92000
Cash at Beginning of Period		44000
Cash at End of Period		136000