Question

E5-16B (LO5,6) (Preparation of a Statement of Cash Flows) A comparative balance sheet for Gokhale Corporation is presented below December 31 Assets Cash Accounts receivable Inventories Land Equipment Accumulated depreciation-equipment 2017 2016 $109,500 123,000 270,000 106,500 390,000 $33,000 99,000 283,500 165,000 300,000 (103,500)(63,000) $817,500 Total Liabilities and Stockholders' Equit Accounts payable Bonds payable Common stock ($1 par) Retained earnings $895,500 $ 70,500 300,000 246,000 201,000 $817,500 51,000 225,000 321,000 298,500 $895,500 Total Additional information: 1. Net income for 2017 was $187,500 2. Cash dividends of $90,000 were declared and paid 3. Bonds payable amounting to $75,000 were retired through issuance of common stock. 4. Land was sold for cost 5. Equipment was purchased but no equipment was sold

Answer 1

Answer-

GOKHALE CORPORATION
STATEMENT OF CASH FLOWS    (USING INDIRECT METHOD)
FOR THE YEAR ENDED DECEMBER 31,2017
Particulars		Amount
		$
Cash flow from operating activities
Net Income		187500
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		40500
Change in operating assets & liabilities
Increase in accounts receivable		-24000
Decrease in inventories		13500
Decrease in accounts payable		-19500
Net cash flow from operating activities (a)		198000
Cash Flow from Investing activities
Cash received from sale of land		58500
Purchase of equipment		-90000
Net cash Flow from Investing activities (c)		-31500
Cash Flow from Financing activities
Cash dividends paid		-90000
Net cash Flow from Financing activities (b)		-90000
Net Change in cash c=a+b+c		76500
Beginning cash balance		33000
Closing cash balance		109500
Schedule of non cash financing activities
Issue of common stock for bonds payable		75000