Question

Exercise 13-8 Here are comparative balance sheets for Velo Company, VELO COMPANY Comparative Balance Sheets December 31 Assets 2015 Cash $62,610 Accounts receivable 85,730 Inventory 170,260 Land 74,630 Equipment 270,680 Accumulated depreciation equipment (65,850) Total $598,060 Liabilities and Stockholders' Equity Accounts payable $39,170 Bonds payable 150,130 Common stock ($1 par) 214,410 Retained earnings 194,350 Total $598,060 2014 $22,430 76,290 188,990 100,690 199,850 (31,830) $556,420 $46,660 203,410 172,180 134,170 $556,420 Additional information: 1. Net income for 2015 was $92,870. 2. Cash dividends of $32,690 were declared and paid. 3. Bonds payable amounting to $53,280 were redeemed for cash $53,280. 4. Common stock was issued for $42,230 cash. 5. No equipment was sold during 2015, but land was sold at cost. Prepare a statement of cash flows for 2015 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

Velco Company Statement of Cash Flow For the Year Ended 2015 Amount($) 92,870.00 34,020.00 Particulars Cash Flow From Operating Activities Net Income Adjustments to reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation on Equipments (Increase)Decrease in Current Assets: Accounts Receivable Inventory Prepaid Expenses Increase(Decrease) in Current Liabilities: Accounts Payable Accrue Expenses and Unearned Revenues Net Cash Provided By Operating Activities -9,440.00 18,730.00 -7,490.00 1,28,690.00 Cash Flow From Investing Activities: Sale of Land Purchase of Equipment 26,060.00 -70,830.00 Net Cash Provided By Investing Activities -44,770.00 Cash Flow From Financing Activities: Cash Dividends Paid Bonds Redeemed Issue of Common Stock -32,690.00 -53,280.00 42,230.00 Net Cash Used in Investing Activities -43,740.00 Net Increase(Decrease) in Cash Opening Cash Balance 40,180.00 22,430.00 Closing Cash Balance 62,610.00