Question

Cash Flow Statement

Using the data below, prepare a statement of cash flows (indirect method) for Hanger Corporation for the year 2018

	December 31
	2018	2017
Cash	72,000	26,000
Account Receivable	98,500	76,900
Inventory	145,000	165,000
Prepaid rent	6,800	6,100
Land	110,000	70,000
Building	268,000	226,000
Accumulated depreciation	(29,000)	(9,000)
Equipment	15,000	30,000
	686,300	591,000
Accounts Payable	89,000	83,000
Salaries Payable	49,500	59,900
Bonds payable	115,000	60,000
Common stock	110,000	110,000
Retained earnings	332,800	281,100
Treasury stock at cost	(10,000)	(3,000)
	686,300	591,000
	For 2018 Year
Net Income	75,300
Depreciation expense	20,000
Cash dividends declared and paid	23,600

Answer 1

Cash Flow Statement
Particulars	Amount	Amount
Net Income		$   75,300.00
Adjustments to reconcile net income to:
Net cash provided by operating activities
Depreciation	$   20,000.00
Increase in Accounts Receivable	$ (21,600.00)
Decrease in Inventory	$   20,000.00
Increase in Prepaid Rent	$       (700.00)
Increase in Accounts Payable	$      6,000.00
Decrease in Salaries Payable	$ (10,400.00)
Net Cash Generated		$   13,300.00
Net cash provided by operating activities	(A)	$   88,600.00
Cash Flows from Investing Activities
Purchase of Land	$ (40,000.00)
Purchase of Building	$ (42,000.00)
Sale of Equipment	$   15,000.00
Net cash provided by investing activities	(B)	$ (67,000.00)
Cash Flows from Financing Activities
Issue of Bonds Payable	$   55,000.00
Increase in treasury stock	$   (7,000.00)
Cash dividend paid	$ (23,600.00)
Net cash provided by Financing activities	(C')	$   24,400.00
Net increase/decrease in cash	(A+B+C)	$   46,000.00
Add:Opening cash balance		$   26,000.00
Closing cash balance		$   72,000.00