Question

Prepare a statement of Cash Flow for the current year using the indirect method

Robust Robots, Inc. Comparative Balance Sheet December 31, 2019 and 2018 2019 2018 Assets Current Assets: Cash Accounts Receivable, net Merchandise Inventory Supplies Prepaid Insurance Total Current Assets $ $ $ $ $ $ 65,000 150,000 135,000 9,700 30,000 389,700 $ $ $ $ $ $ 80,000 100,000 70,000 500 10,000 260,500 Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation - Equipment Total Property, plant, and Equipment Total Assets $ $ $ $ 500,000 (80,000) 420,000 809,700 $ $ $ $ 240,000 (90,000) 150,000 410,500 4 Page

Answer 1

Explanation:

Statement of Cash Flows (Indirect Method) Cash flow from Operating Activities: Net Income 55500 Adjustments to reconcile net income: Depreciation Expense Loss on sale of Equipment Increase in Accounts Receivable Increase in Inventory Increase in Supplies Increase in Prepaid Insurance Increase in Accounts payable Decrease in Unearned Revenue Increase in Salary payable 20000 5213 -50000 -65000 -9200 -20000 110000 -10000 10000 -8987) Net Cash provided by Operating activities 46513 Cash flow from Investing Activities: Purchase of Equipment Sale of Equipment -220000 54787 Net Cash used in Investing Activities -165213 Cash flow from Financing Activities: Cash dividends paid Proceeds from Issuance of Common Stock -10000 113700 Net Cash provided by Financing Activities 103700 Net Increase in Cash Cash, Beginning Balance Cash, Ending Balance Note: Non cash Activities Purchase of equipment by issuing Notes payable - 15000 80000 65000 130000

Equipment purchased for cash:

Purchase Cost of Equipment = Ending Balance in PPE a/c + Cost of Sold Equipment - Beg. Balance in PPE a/c

= 500000 + 90000 - 240000

= 350000

Equipment Purchased for Cash = Purchase cost of equipment - Note payable Issued

= 350000 - 130000

= 220000

Sale Value of Equipment:

Accumulated Depreciation on sold equipment = Beg. Balance in Acc. Depr a/c + Depreciation Expense - Ending Balance in Acc. Depr a/c

= 90000 + 20000 - 80000

= 30000

Book Value of Sold Equipment = Cost - Acc. Depreciation

= 90000 - 30000

= 60000

Sale Value of Equipment = Book Value - Loss on sale

= 60000 - 5213

= 54787