Question

Statement of Cash Flows—Indirect Method

The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows:

Statement of Cash Flows-Indirect Method The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows Dec. 31, 0Y8 Dec. 31, 20Y7 Assets Cash Accounts receivable (net) Inventories Prepaid expenses Equipment Accumulated depreciation-equipment $56,320 $68,950 92,950 115,210 3,490 206,420 (65,480)(50,620) $457,920 $436,400 86,550 123,630 5,040 251,860 Total assets Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) Mortgage note payable Common stock, $1 par Paid-in capital: Excess of issue price over par-common stock Retained earnings $96,160 $91,210 130,920 9,000 123,000 82,270 $457,920 $436,400 0 14,000 198,000 149,760 Total liabilities and stockholders' equity

Answer 1

Prepare a Cash flow statement using indirect method :
Statement of cash flows
Particulars				Amount	Amount
Cash flow from Operating activities
Net income					172770
Adjustment to reconcile net income to cash flow from
Operating activities :
Depreciation				31990
Changes in current operating assets and liabilities :
Decrease in accounts receivable	(92950-86550)			6400
Increase in inventories	115210-123630			-8420
Increase in prepaid expenses	3490-5040			-1550
Increase in accounts payable	91210-96160			4950
Cash generated from operating activities					33370
Net cash flow from operating activities					206140
Cash flow from investing activities :
Purchase of equipment				-62570
Net cash flow used for investing activitiees					-62570
Cash flow from financing activities
cash receivedfrom sale of common stock				80000
Cash paid for dividends				-105280
Cash paid to retirm mortagage note payable				-130920
Net cash flow from financing activities					-156200
Change in cash					-12630
Cash at the beginning of the year					68950
Cash at the ending of the year					56320