Question

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

1		Dec. 31, 20Y8	Dec. 31, 20Y7
2	Assets
3	Cash	$145,630.00	$180,110.00
4	Accounts receivable (net)	224,520.00	241,890.00
5	Inventories	321,860.00	299,730.00
6	Prepaid expenses	12,550.00	10,220.00
7	Equipment	655,090.00	537,200.00
8	Accumulated depreciation-equipment	(170,220.00)	(132,040.00)
9	Total assets	$1,189,430.00	$1,137,110.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$240,110.00	$237,190.00
12	Mortgage note payable	0.00	335,380.00
13	Common stock, $10 par	507,000.00	244,000.00
14	Paid-in capital: Excess of issue price over par—common stock	410,000.00	320,000.00
15	Retained earnings	32,320.00	540.00
16	Total liabilities and stockholders’ equity	$1,189,430.00	$1,137,110.00

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:

A.	Net income, $186,360
B.	Depreciation reported on the income statement, $82,730
C.	Equipment was purchased at a cost of $162,440 and fully depreciated equipment costing $44,550 was discarded, with no salvage realized.
D.	The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
E.	Cash dividends declared and paid, $154,580

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Labels and Amount Descriptions
Cash paid for dividends
Cash paid for equipment
Cash paid for merchandise
Cash paid for purchase of land
Cash paid to retire mortgage note payable
Cash received from customers
Cash received from sale of common stock
Change in cash
December 31, 20Y8
Decrease in inventory
Decrease in accounts payable
Decrease in accounts receivable
Decrease in prepaid expenses
Depreciation
For the Year Ended December 31, 20Y8
Gain on disposal of equipment
Gain on sale of investments
Increase in accounts payable
Increase in accounts receivable
Increase in inventory
Increase in prepaid expenses
Loss on disposal of equipment
Loss on sale of investments
Net cash flow from financing activities
Net cash flow from investing activities
Net cash flow from operating activities
Net cash flow used for financing activities
Net cash flow used for investing activities
Net cash flow used for operating activities
Net income
Net loss

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Score: 0/153

Yellow Dog Enterprises Inc.

Statement of Cash Flows

1	Cash flows from operating activities:
2
3	Adjustments to reconcile net income to net cash flow from operating activities:
4
5	Changes in current operating assets and liabilities:
6
7
8
9
10
11
12	Cash flows from investing activities:
13
14
15
16	Cash flows from financing activities:
17
18
19
20
21
22	Cash at the beginning of the year
23	Cash at the end of the year

Answer 1

Yellow Dog Enterprises Inc.
Statement of Cash Flows
1	Cash flows from operating activities:
2	Net income		$   1,86,360.00
3	Adjustments to reconcile net income to net cash flow from operating activities:
4	Depreciation	$       82,730.00
5	Changes in current operating assets and liabilities:
6	Decrease in accounts receivables	$       17,370.00
7	Increase in inventory	$     (22,130.00)
8	Increase in prepaid expenses	$       (2,330.00)
9	Increase in accounts payables	$         2,920.00
10			$       78,560.00
11	Net cash flow from operating activities		$   2,64,920.00
12	Cash flows from investing activities:
13	Cash paid for Equipment	$ (1,62,440.00)
14
15	Net cash flow used for investing activities		$ (1,62,440.00)
16	Cash flows from financing activities:
17	Cash paid for dividends	$ (1,54,580.00)
18	Cash received from sale of common stock	$   3,53,000.00
19	Cash paid to retire mortgage note payable	$ (3,35,380.00)
20	Net cash flow used for financing activities		$ (1,36,960.00)
21	Change in cash		$     (34,480.00)
22	Cash at the beginning of the year		$   1,80,110.00
23	Cash at the end of the year		$   1,45,630.00

General notes for cash flow

Cash is increased when Current liability increase or Current asset Decrease.

Cash is Decreased when Current liability Decrease or Current asset Increase.

Depreciation or loss on sale of any asset is a non cash expense hence it will be added to net income to get operating cash

Profit on sale of asset or investment is a non cash profit and hence will be deducted from operating income.