Question

Statement of Cash Flows Demonstration Problem The following comparative balance sheets are for Dells Corporation as of June 30, 2010, and June 30, 2017. Also provided is the statement of income and retained earnings for the year ended June 30, 2018, with additional data. Dells Company Comparative Balance Sheet June 30, 2018 and 2017 Assets 2018 2017 Increase/Decrease) Current Assets: Cash $30,000M $80,000 - L (550,000) — K Accounts Receivable, net 160,000 100,000 60,000 Merchandise Inventory 100,000 30,000 Prepaid Rent 20.000 10.000 10.000 Total Current Assets $310.000 $260.000 $50.000 70,000 Property, Plant, and Equipment: Equipment Accumulated Depreciation-Equipment Total Property, Plant, and Equipment Total Assets $400,000 (60.000) $340,000 S650.000 $200,000 (50.000) $150.000 $410,000 $200,000 (10.000) $190.000 S240,000 Liabilities and Stockholder's Equity $50,000 -0- 10,000 30,000 $90,000 $40,000 50,000 20,000 20,000 $130,000 -$10,000 (50,000) — (10,000) - 10.000 ($40.000 Current Liabilities: Accounts Payable Notes Payable-Bank Salaries Payable Federal Income Taxes Payable Total Current Liabilities Stockholder's Equity: Common Stock, $10 par Paid-in Capital in Excess of Par Retained Earnings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $200,000 50,000 H O $300,000 500.000 210,000 $560,000 S650.000 $100,000 -0- 180.000 $280,000 $410,000 30.000 $280,000 S240,000

Answer 1

Statement of Cash flows using Indirect method is shown as follows:-

DELLS CORPORATION

Statement of Cash Flows

For The Year Ended June 30, 2018 (Amounts in $)

Cash Flows from Operating Activities
Net Income		70,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	20,000
Loss on Sale of Equipment	7,000
Increase in Accounts Receivable	(60,000)
Increase in Merchandise Inventory	(30,000)
Increase in Prepaid Rent	(10,000)
Increase in Accounts Payable	10,000
Decrease in Salaries Payable	(10,000)
Increase in Federal Income Taxes Payable	10,000	(63,000)
Net cash provided (used) by operating activities (A)		7,000
Cash Flows from Investing Activities
Purchase of Equipment	(220,000)
Sale of Equipment	3,000
Net cash provided (used) by investing activities (B)		(217,000)
Cash Flows from Financing Activities
Issue of Common Stock	250,000
Redemption of note payable	(50,000)
Dividends paid	(40,000)
Net cash provided (used) by financing activities (C)		160,000
Net increase (decrease) in cash (A+B+C)		(50,000)
Cash Balance as on June 30, 2017		80,000
Cash Balance as on June 30, 2018 (80,000-50,000)		30,000

Notes:-

1) Decrease in current assets and increase in current liabilities are added to net income whereas increase in current assets and decrease in current liabilities are deducted from net income for calculating operating cash flows.

2) Notes payable are shown under financing activities.