Question

Prepare a statement of cash flows for 2016 in good form using the indirect method for cash flows from operating activities.

The Murdock Corporation reported the following balance sheet data for 2016 and 2015 4 20162015 Cash Available-for-sale securities (not cash $ 92,915 $ 31,355 22,500 99,000 94.000 80,850 179,000 57600 3,400 1.278,000 1,139,000 (624,000) (586,000) equivalents) Accounts receivable Inventory Prepaid insurance Land, buildings, and equipment Accumulated depreciation 0140:55 2,760 Total assets 1,045,175 $ 925,205 Accounts payable Salaries payable $88,940 $162,670 31,500 37,600 89,000o 0 300,000 300,000 379,035 342.035 25,600 Notes payable (current) Bonds payable Common stock Retained earnings 214,000 Total liabilities and shareholders' equity $ 1,045,175 $ 925,205 Additional information for 2016 Sold available-for-sale securities costing $76,500 for $82,40o. Equipment costing $20,000 with a book value of $6,400 was sold for $8.100 Issued 6% bonds payable at face value, $214,000. Purchased new equipment for $159,000 cash. Paid cash dividends of $27000 Net income was $64,000 Required Prepare a statement of cash flows for 2016 in good form using the indirect method for rach finns frnm nne rat inn activities ,Δmniinte 'n he ed'irred .hnild ho indir', 'ad with

Answer 1

MURDROCK COMPANY
Statement of Cash Flows
For the year ended December 31,2016
	$	$
Cash flow from Operating activities:
Net Income	$64,000
Adjust for non cash effects:
Depreciation (38000+13600)	51,600.00
Profit on sale of available for sale securities	-5,900.00
Profit on sale of equipment	-1,700.00
Increase in inventory	-21,400.00
Increase in Account Receivable	-13,150.00
Decrease in Prepaid insurance	640.00
Decrease in Trade payable	-73,730.00
Decrease in salaries payable	-5,900.00
Decrease in Note Payable	-51,400.00
Net cash Used in operating activities	-56,940.00
Investing activities:
Purchase of Equipment	-159,000.00
Sale of available for sale securities	82,400.00
Sale of Equipment	8,100.00
Net cash used in investing activities	-68,500.00
Financing activities:
Issue of 6% Bonds	214,000.00
Dividend paid	-27,000.00
Net cash provided in financing activities	187,000.00
Net increase in cash	61,560.00
Beginning cash and cash equivalents	31,355.00
Ending cash and cash equivalents		92,915.00