Question

Prepare a statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.

The comparative balance sheets and income statements for Gypsy Company follow. Balance Sheets As of December 31 Year 2 Year 1 Assets Cash $23,553 2,102 6,590 2,848 1,261 6,178 42,224 (16,430) 8,762 Accounts receivable Inventory Equipment Accumulated depreciation-equipment 19,644 (8,879) 18,102 Land $61,112 Total assets 44,843 Liabilities and equity Accounts payable (inventory) Long-term debt Common stock 2,619 4,231 6,461 2,827 23,500 32,166 9,500 24,651 Retained earnings Total liabilities and equity $61,112 $44,843 Income Statement For the Year Ended December 31, Year 2 $ 30,270 (11,998) 18,272 (3,732) Sales revenue Cost of goods sold Gross margin Depreciation expense Operating income Gain on sale of equipment Loss on disposal of land 14,540 550 (60) 15,030 Net income Additional Data 1. During Year 2, the company sold equipment for $18,567; it had originally cost $29,300. Accumulated depreciation on this equipment was $11,283 at the time of the sale. Also, the company purchased equipment for $6,720 cash 2. The company sold land that had cost $4,660. This land was sold for $4,600, resulting in the recognition of a $60 loss. Also, common stock was issued in exchange for title to land that was valued at $14,000 at the time of exchange. 3. Paid dividends of $7,515

Answer 1

Answer-

GYSPY COMPANY
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED DECEMBER 31,YEAR 2
Particulars		Amount
		$
Cash flow from operating activities
Net Income		15030
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		3732
Gain on sale of equipment		-550
Loss on sale of land		60
Change in operating assets & liabilities
Increase in accounts receivable		-841
Increase in inventory		-412
Decrease in accounts payable		-1612
Net cash flow from operating activities (a)		15407
Cash Flow from Investing activities
Land purchased
Equipment purchased		-6720
Equipment sold		18567
Land sold		4600
Net cash Flow from Investing activities (b)		16447
Cash Flow from Financing activities
Cash dividends paid		-7515
Long term debt paid		-3634
Net cash Flow from Financing activities (c)		-11149
Net Change in cash c=a+b+c		20705
Beginning cash balance		2848
Closing cash balance		23553
Schedule of non cash investing & financing activities
Issuance of common stock for land		14000