Partial balance sheets
and additional information are listed below for Sowell
Company.
| Sowell Company | ||||||
| Partial Balance Sheets | ||||||
| as of December 31 | ||||||
| 2018 | 2017 | |||||
| Assets | ||||||
| Cash | $ | 42,000 | $ | 21,800 | ||
| Accounts receivable | 71,800 | 87,000 | ||||
| Inventory | 42,000 | 36,800 | ||||
| Liabilities | ||||||
| Accounts payable | $ | 55,800 | $ | 64,000 | ||
Additional information for 2018:
Net income was $90,000.
Depreciation expense was $20,000.
Required:
Prepare the operating activities section of the statement of cash
flows for 2018 using the indirect method. (Amounts to be
deducted should be indicated with a minus sign.)
Homework Answers
Answer
| Cash Flow from Operating Activities | ||
| Net Income | $ 90,000 | |
| Adjustments: | ||
| Depreciation | $ 20,000 | |
| Changes in operating asset and liabilities | ||
| Decrease in Account receivable | $ 15,200 | |
| Increase in Inventory | $ (5,200) | |
| Decrease in Account payable | $ (8,200) | |
| $ 111,800 |
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Partial balance sheets
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3. Purchase $55,000 in equipment by issuing a $55,000 long-term
note payable to the seller. No cash is exchanged in the
transaction.
4. Declare and pay a cash dividend of $22,500.
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