Question

The following information is related to Mitchell Company's fiscal year 2018.

            Income Statement:

                        Net Income                             $300,000

                        Depreciation Expense                30,000

                        Loss on Sale of Plant Assets     10,000

                        Interest Expense                             500

            Balance Sheet - 12/31/18:

                        Accounts Payable Increase         4,000

                Accounts Receivable Increase    5,000

                        Plant Assets - Purchased         200,000

                        Plant Assets – Proceeds

from sale          100,000

                       

            Additional Information:

                        Cash Balance - 12/31/2017:  $50,000

Common Stock exchanged for outstanding Long-Term Notes Payable of $150,000

                        Dividends paid were $30,000

Use this information to prepare the Statement of Cash Flows for Mitchell Company using the indirect method.

Answer 1

Cash flow statement
Cash flow from operating activities
Net income		$    300,000.00
Add:
Depreciation expense	$      30,000.00
loss on sale of asset	$      10,000.00
interest expense	$            500.00	$      40,500.00
Add/less changes in current assets
Add:Accounts payable increase	$        4,000.00
less:Accounts receivable increase	$      (5,000.00)	$      (1,000.00)
cash provided from operating activities		$    339,500.00
Cash flow from investment activities
Purchase of plant assets	$ (200,000.00)
sale of plant assets	$    100,000.00
cash flow used in investment activities		$ (100,000.00)
Cash flow from financing activities
Interest expense	$          (500.00)
dividend payment	$    (30,000.00)
cash flow used in financing activities		$    (30,500.00)
change in cash flow		$    209,000.00
Add:opening cash balance		$      50,000.00
closing cash balance		$    259,000.00
Non cash flow
long term notes payable	$    150,000.00