Question

QUESTION #2 Hurley Inc, a software retailer recently completed endy completed its 2011 operations. The following information is available Cash ........ Hurley Inc. Comparative Balance Sheet Information December 31 2011 2010 5150,990 $ 89,040 Accounts receivable ....... 54,390 65,100 Merchandise inventory ............. 490,980 391,650 Equipment............... 295,260 214,200 Accumulated depreciation ........... 135,240 85,680 Accounts payable. 107,730 99,750 Income taxes payable... 12,600 18,900 Common shares......... 579,600 462,000 Retained earings ........ 156,450 93,660 Hurley Inc. Income Statement For Year Ended December 31, 2011 51.707.300 Cost of goods sold .... ...--------- 781,200 Cross profit 5 926,100 Operating expenses: Depreciation expense....... 5 49.560 Other expenses 503,370 Total operating expenses.... 552,930 Income from operations...... 5373,170 Income taxes ....... 125 580 Net income............ 5 247.590 Additional information regarding Hurley's activities during 2011: 1. Equipment was purchased for $81,060 cash. 2 Issued 4 200 common shares for cash at $28 per share. 3. Declared and paid $ of cash dividends during the year. Required Prepare a statement of cash flows for 2011 that reports the cash inflows and outflows from operating activities according to the indirect method. Show your supporting calculations

Answer 1

Hurley Inc. Statement of Cash Flows For the Year Ended December 31, 2011
Cash flow from operating activities
Net income		247590
Adjustments to reconcile net income to net cash flow
Depreciation expense	49560
Decrease in accounts receivable (54390-65100)	10710
Increase in inventories (490980-391650)	(99330)
Increase in accounts payable (107730-99750)	7980
Decrease in income taxes payable (18900-12600)	(6300)	(37380)
Net cash flow provided by operating activities		210210
Cash flow from investing activities
Purchase of equipment	(81060)
Net cash used by investing activities		(81060)
Cash flow from financing activities
Issuance of common stock	117600
Payment of cash dividends	(184800)
Net cash provided by financing activities		(67200)
Net increase in cash		61950
Cash at beginning of period		89040
Ending cash balance, Dec. 31, 2019		150990

4200*28 = 117600

Dividends = retained earnings beginning + net income – retained earnings ending = 93660+247590-156450 = 184800