Question

Sharp Screen Films, Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: 

Additional Data:

 a. Bought equipment for cash, $61,350.

 b. Paid $12,900 on the long-term note payable.

 c. Issued new shares of stock for $35,900 cash.

 d. Dividends of $10,150 were declared and paid.

 e. Other expenses all relate to wages.

 f. Accounts payable includes only inventory purchases made on credit.

Required:

 1. Prepare the statement of cash flows using the indirect method for the year ended December 31, current year.

Answer 1

Cash flow from Operations
Net Income	43,650
Additions to Cash
Depreciation	14,850
Decrease in Accounts receivable	7,000
Subtractions from Cash
Increase in inventory	(5,550)
Decrease in accounts payable	(10,200)
Decrease in outstanding wages	(300)
NET CASH FROM OPERATIONS		$ 49,450
Cash flow from investing activites
Purchase of equipment	(61,350)
Payment of long term note	(12,900)
NET CASH FROM INVESTING ACTIVITIES		$ (74,250)
Cash flow from financing activities
Issue of shares	35,900
Dividend paid	(10,150)
NET CASH FROM FINANCING ACTIVITIES		$ 25,750
NET INCREASE IN CASH & CASH EQUIVALENTS		$ 950
Add Opening cash balance		$ 65,800
Closing cash balance		$ 66,750