Question

PR 16-1A Statement of cash flows-indirect method The comparative balance sheet of Flack Inc. for December 31, 2013 and 2012, is shown as follows: Dec 31, 2013 Dec 31, 2012 Assets Cash ........ $234,660 $219,720 Accounts receivable (net)........... ..... 85,440 78,360 Inventories .......... 240,660 231,420 Investments .... 90,000 Land 123,000 Equipment. 264,420 207,420 Accumulated depreciation--equipment ........... (62.400) (55,500) $885,780 $771,420 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) ................ $159,180 $151,860 Accrued expenses payable (operating expenses) ..... 15,840 19,740 Dividends payable........... 9,000 7,200 Common stock, $1 par.......... ... .. 48,000 36,000 Pald-in capital in excess of par--common stock ................... 180,000 105,000 Retained earnings... 473,760 451,620 $885,780 $771,420 The following additional information was taken from the records: a. The investments were sold for $105,000 cash. b. Equipment and land were acquired for cash. C. There were no disposals of equipment during the year. d. The common stock was issued for cash. e. There was a $58,140 credit to Retained Earnings for net income. f. There was a $36,000 debit to Retained Earnings for cash dividends declared. Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities

Answer 1

FLACK INC. Statement of Cash Flows For the year Ended December 31, 2013 Cash flows from operating activities Net Income S 58.140 Addustments to reconcile net income to net cash flow from operating activities Depreciation $ 6.900 Gain on sale of Investments S (15,000) Changes in Current operating assets and liabilities Increse in accounts receivables S (7.080) Increase in Inventory S (9.240) Increase in Accounts payable $ 7,320 Decrease in accured expenses payable S (3.900) Net cash flow From operating activities Cash flows from investing activities: sale of Investments $ 105,000 Purchase of Land S (123,000 Purchase of equipment S (57.000) Net cash flow used for investing activities $ 37.140 S (75,000)

S $ (34,200) 87,000 Cash flows from Financing activities: Payment of Dividends Issuance of common stock Net cash flow provided by financing activities Increse in cash Cash at the beginning of the year Cash at the end of the year $ 52.800 $ 14,940 S 219,720 $ 234,660 Working Notes: Payment of Dividends Opening balance of Dividends payable Add: Dividends declared $ $ $ $ $ 7,200 36,000 43,200 9.000 34,200 Less: Closing balance of Dividends payable