Question

P14-40B Preparing the statement of cash flows-indirect method Learning Objective 2 Accountants for Benson, Inc. have assembled the following data for the year ended December 31, 2018: Net Cash Prov. by Op. Act. $85,700 2018 2017 Current Assets Cash Accounts Receivable Merchandise Inve $ 105,100 18,000 64,400 68,900 86,000 82,000 ntory Current Liabilities: Accounts Payable Income Tax Payable 58,000 56,100 14,700 16,900 Transaction Data for 2018: Issuance of common stock for cash Depreciation expense Purchase of equipment with cash Acquisition of land by issuing long-term notes payable Book value of building sold s 37,000 24,000 69,000 123,000 Payment of notes payable Payment of cash dividends Issuance of notes payable to borrow cash Gain on sale of building $ 47,100 53,000 68,000 4,500 66,000 61,000 Net income Prepare Benson's statement of cash flows using the indirect method, Include an accompanying schedule of non-cash investing and financing activities.

please provide steps on how to do this in the indirect method.

Answer 1

Cashflow Statement using Indirect Method: Particulars Cashflow from Operating activities: AmountS Amount $ Net Income Adjustments to Reconcile Net Income to Net cash Provided tb Operating Activties 66,000 Add: Depreciation expenses Less: Gain on sale of building Add: Decrease in Accounts Receivable Less: Increase in Mechandise Inventory Add: Increase in Accounts Payable Less: Decrease in Income taxes Payable 24,000 (4,500) 4,500 (4,000) 1,900 (2,200) Net cash provided by Operating Activities 85,700 Cash Flows From Investing Activities: Cash paid for Acquisition of Equipment Cash Received from sale of Building (61000+4500) (69,000) 65,500 Net Cash Flows From Investing Activities (3,500) Cash Flows From Financing Activities Cash Paid for Repayment of Notes Payable Cash Received from Issue of Notes Payable Cash Received from Issue of Common Stock Cash piad for Dividends (47,100) 68,000 37,000 (53,000) Net Cash Flows From Financing Activities 4,900 18,000 105,100 Cash balance at prior vear end Cash balance at current year end