Question

Statement of cash flows-indirect method Instructions Labels and Amount Descriptions Statement of Cash Flows Instructions The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 2018 and 2017, is as follows: Dec 31, 20Y8 Dec 31, 2047 $80,000.00 $100,000.00 275,000.00 300,000.00 510,000.00 400,000.00 15,000.00 10,000.00 1,070,000.00 750,000.00 (200,000.00) (160,000.00) $1,750,000.00 $1,400,000.00 Assets 3 Cash 4 Accounts receivable (net) 5 Inventories 6 Prepaid expenses 7 Equipment 8 Accumulated depreciation equipment 9 Total assets Liabilities and Stockholders' Equity 11 Accounts payable (merchandise creditors) 12 Mortgage note payable 13 Common stock, $10 par Paid-in capital: Excess of issue price over par- common stock 15 Retained earnings 16 Total liabilities and stockholders' equity $100,000.00 0.00 600,000.00 $90,000.00 400,000.00 200,000.00 300,000.00 100,000.00 750,000.00 610,000.00 $1,750,000.00 $1,400,000.00 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, $190,000. b. Depreciation reported on the income statement, $115,000. c. Equipment was purchased at a cost of $395,000 and fully depreciated equipment costing $75,000 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. 40,000 shares of common stock were issued at $15 for cash. f. Cash dividends declared and paid, $50,000. 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. Enter amounts that represent cash outflows as negative numbers using a minus sign.

Answer 1

YELLOW DOG ENTERPRISES Statement of Cash flows (Indirect method) For the year ended December 31, 20Y8 Cash flows from Operating Activities Net Income $190,000 Adjustments to reconcile net income to net cash provided by Operating Activities Depreciation expense $115,000 Change in current operating assets and liabilities Decrease in Accounts Receivable $25,000 Increase in Inventory ($110,000) Increase in prepaid expense ($5,000) Increase in account payable $10,000 Net Cash flow from Operating Activities Cash flows from Investing Activities Cash paid for equipment ($395,000) Net Cash flow used for Investing Activities Cash flows from Financing Activities Cash paid to retire mortgage payable ($400,000) Cash received from sale of common stock $600,000 Cash paid for dividend ($50,000) Net Cash flow from Financing Activities Change in cash Cash at the beginning of the year Cash at the end of the year $225,000 ($395,000) $150,000 $20,000 $100,000 $80,000