Question

Use the following information of VPI Co. to prepare a statement of cash flows for the year ended December 31 using the indirect method. (Amounts to be deducted should be indicated by a minus sign.) Gain on sale of machinery Cash received from sale of machinery Increase in accounts payable Net income Decrease in accounts receivable $ 2,600 Cash balance at prior year-end Increase in inventory Depreciation expense Cash received from issuing stock Cash paid for dividends $42, 400 7,400 6,400 10,400 3,400 10,700 2,700 47, 000 5,400 VPI CO. Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilities Cash flows from investing activities Cash flows from financing activities

Answer 1

	Cash flows from operating activities
	Net Income					$ 47,000.00
	Adj. to reconcile net income to net cash provided
	by operating activities
	Income statement items not affecting cash
	Depreciation expnese					$   6,400.00
	Gain on sale of machinery					$ (2,600.00)
	Changes in current operating assets and liabilities
	Increase in inventory					$ (7,400.00)
	Increase in accounts payable					$   2,700.00
	Decrease in accounts receivable					$   5,400.00
	Net cash generated from operating activities					(A)	$   51,500.00
	Cash flow from investing activities
	Cash received from sale of machinery					$ 10,700.00
	Net cash generated from investing activities					(B)	$   10,700.00
	Cash flow from financing activities
	Cash received from issuing stock					$ 10,400.00
	Cash paid for dividends					$ (3,400.00)
	Net cash generated from financing activities					(C)	$     7,000.00
	Net increase in cash and cash equivalents					(A+B+C)	$   69,200.00
Add:	Beginning cash balance						$   42,400.00
	Ending cash balance						$ 111,600.00