Question

3.) Cash flows -indirect method: The data below are taken data below are taken from the financial statements of the Rutherford Corporation: Income Statement: 2019 Net Income Depreciation Expense 840,000 200,000 Gain on Sale of Equipment 110,000 Balance Sheet: 12/31/2019 12/30/2018 Cash 1,950,000 1,200,000 Accounts Receivable 710,000 680,000 Inventory 840,000 800,000 Prepaid Expenses 30,000 35,000 Accounts Payable 660,000 630,000 Other information: Sold equipment for $25,000. Purchased new equipment for $120,000. Paid cash dividends for 2009 of $50,000. Prepare Statement of Cash Flows in good form for year ended 2019. (do not categorize-list each account)
for a test

Answer 1

Statement of cash flows for the year ended 2019
Cash flow from operating activities:-
Net Income			840000
Adjustments
Add/Less:
Depreciation		200000
Gain on sale of equipment		-110000
Increase in accounts receivable		-30000
Increase in inventory		-40000
Decrease in prepaid expenses		5000
Increase in accounts payable		30000	55000
Net cash flow from operating activities			895000
Cash flow from investing activities:-
Proceeds from sale of equipment		25000
Cost of new equipment purchased		-120000
Net cash flow from investing activities			-95000
Cash flow from financing activities:-
Payment of dividends		-50000
Net cash flow from financing activities			-50000
Total cash flow increase/(decrease)			750000
Add: Cash balance 12/30/2018			1200000
Cash balance 12/30/2019			1950000