Question

UNIVERSIDAD ANAG MENDEZ ESCUELA DE ESTUDIOS PROFESIONALES ACCO 315 - CONTABILIDAD INTERMEDIA II/ Assignment - 2 STATEMENT OF CASH FLOWS - INDIRECT METHOD Berclay Tile Company reported net income of $6,160 for 2018 but has been showing an overdraft in its bank account in recent months. The manager has contacted you as the auditor for an explanation. The comparative balance sheet was given to you for examination, along with the following information: a. Equipment was sold for $1,500, its costs was $2,500, and its book value was $500. The gain was reported as Other Revenue b. Cash dividends of $4,500 were paid. 31-Dec-18 31-Dec-17 S Cash and cash equivalents Accounts receivable Inventory Prepaid (960) 4,000 2,350 4,780 1,000 750 70 Land 195 12,500 12,500 Building Less: Accum Deprec - Building Equipment Less: Accum Deprec - Equipment 10,000 25,000 (15,000) 37,250 (22,500) 11,000 25,000 (14,000) 30,850 (18,400) 14,750 12,450 Total $ 42,710 $ 42,675 Accounts payable Taxes payable Wages payable Notes payable - current portion Notes payable - long term Capital stock Retained Earnings 4,250 1,400 750 1,500 10,500 17,500 6,810 3,500 2,350 1,675 3,500 11,500 15,000 5,150 Total $ 42,710 $ 42,675 Instructions Prepare a statement of cash flows for the year ended December 31, 2018, using the indirect method

Answer 1

Cash Flow Statement for year ended 2018
Particulars	Amount
CASH FLOW FROM OPERATING ACTIVITIES
Net profit	6,160
(+) Depreciation	7,100
(-) Gain on sale of Equipment	(1,000)
Operating profit before working capital changes	12,260
(-) Increase in Accounts receivable	(3,000)
(-) Increase in Inventory	(1,600)
(+) Decrease in prepaid Expenses	125
(+) Increase in Accounts payable	750
(-) Decrease in Tax payable	(950)
(-) Decrease in wage payable	(925)
(-) Decreases in notes payable- current portion	(2,000)
Cash Flow from Operating Activities (A)	4,660
CASH FLOW FROM INVESTING ACTIVITIES
Equipment purchased	(8,900)
Equipment sold	1,500
Cash Flow from Investing Activities (B)	(7,400)
CASH FLOW FROM FINANCING ACTIVITIES
Common stocks issued	2,500
Dividend paid	(4,500)
Notes paid- Long term	(1,000)
Cash Flow From Financing Activities (C)	(3,000)
Net cash flow from Operations (A+B+C)	(5,740)
Opening balance of Cash	4,780
Closing Cash Balance	(960)

Accumulated Depreciation account
To, asset a/c	2,000	By, balance b/d	18,400
		By, Profit & Loss a/c (balancing figure)	6,100
To, Balance c/f	22,500

Equipment account
To, balance b/d	30,850	By, Accumulated Depreciation a/c	2,000
To, gain on sale	1,000	By, cash a/c	1,500
To, cash a/c (balancing figure)	8,900
		By, balance c/f	37,250