Question

The following information is available for Sheridan Company for the year ended December 31, 2022.

Beginning cash balance		$ 12,000
Accounts payable increase		2,850
Depreciation expense		20,500
Accounts receivable decrease		2,400
Inventory decrease		1,550
Net income		28,600
Cash received for sale of land at book value		52,000
Cash dividends paid		19,000
Income taxes payable decrease		1,950
Cash used to purchase land		40,500
Cash used to redeem bonds		33,000
Cash received from issuing stock		80,000

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Solution:

m in 00 $28,600 9 Sheridan Company Statement of cash flows (Partial) For the year ended December 31, 2022 Cash Flows from operating activities: Net Income Adjustments to reconcile net income to cash flow from operating activities: Depreciation expense Accounts Receivables Decrease Inventory decrease Accounts Payable increase Incomme tax Payable Decrease 10 11 $20,500 $2,400 $1,550 $2,850 $1,920 13 14 15 16 $25,380 $53,980 Net Cash Flow From operating Activites 17 18 Cash Flows from investing activities: Cash received for sale of land at book value Cash used to purchase land $52,000 -$40,500 20 21 22 Net Cash Flow From investing Activites $11,500 23 24 25 26 Cash Flows from financing activities: cash dividend cash used to redeem bond cash received from issue of common stock Net Cash Flow From fimancing Activites $19,000 -$33,000 $80,000 27 28 $28,000 29 30 31 32 33 Net change in cash Cash at the beginning Cash at the end of the year 93480 12000 105480 35 36 37 38 39 40 41 et1012 Sheet1013 Sheet1014 Sheet1015 Sheet1016