Question

Selected financial statement information and additional data for Stanislaus Co. is presented below. Prepare a statement of cash flows for the year ending December 31, 2018.

Additional data for 2018 

1 Net income was $220,200. 

2 Depreciation was $31,600. 

3 Land was sold at its original cost. 

4 Dividends of $81,600 were paid. 

5 Equipment was purchased for $84,000 cash. 

6. A long-term note for $201,600 was used to pay for an equipment purchase.

7. Common stock was issued to pay a $67,200 long-term note payable.

Answer 1

First question is being answered here:

In calculating the cash flows statement from indirect method, we will start with the net income. We will add back the non cash item of depreciation in it. Then we will adjust the amount for increase or decrease in cash due to increase or decrease in current assets or current liabilities.Like, an increase in current assets will reduce cash, so we will deduct it and a decrease in current assets will increase cash, so we will add it. Similarly, an increase in current liabilities will increase cash, so it will be added and a decrease in current liabilities will reduce cash, so it will be deducted.

Cash flow statement for year ending December 31, 2018

Description	Amount	Amount
Operating activities:
Net income	220200
Adjustments to reconcile net income to cash
Add: Depreciation expense	31600
Less: Increase in accounts receivable	(60200)
Less: Increase in inventory	(38600)
Add: Increase in accounts payable	35600
Less: Decrease in notes payable - short term	(37800)
Net cash flows from operating activities		150800
Investing activities:
Proceeds from sale of land	37800
Purchase of equipment	(84000)
Net cash used in investing activities		(46200)
Financing activities:
Dividends paid	(81600)
Net cash used in financing activities		(81600)
Net increase in cash		23000
Beginning cash balance		42000
Ending cash balance		65000