Problem

Preparing a Statement of Cash Flows (Indirect Method) (AP13-1)HiDef Films, Inc., is develo...

Preparing a Statement of Cash Flows (Indirect Method) (AP13-1)

HiDef Films, Inc., is developing its annual financial statement, at December 31,2012. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows:

 

2012

2011

Balance sheet at December 31

 

 

Cash

$68,250

$63,500

Accounts receivable

$15,250

22,250

Merchandise inventory

22,250

18,000

Property and equipment

209,250

150,000

Less : Accumulated depreciation

(59,000)

(45,750)

 

$256,000

$208,000

Accounts payable

$9,000

$19,000

Wages payable

4,000

1,200

Note payable. long-term

59,500

71,000

Contributed capital

98,500

65,900

Retained earnings

85,000

50,900

 

$256,000

$208,000

Income statement for 2012

 

 

Sales

$195,000

 

Cost of goods sold

92,000

 

Depreciation expense

13,250

 

Other expenses

43,000

 

Net income

$46,750

 

Additional Data:

a.Bought equipment for cash, $59,250.

b.Paid $11,500 on the long-term note payable.

c.Issued new shares of stock for $32,600 cash.

d.Dividends of $12,650 were declared and paid.

e.Other expenses all relate to wages.

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

Required:

I. Prepare the statement of cash flows using the indirect method for the year ended December 31,2012.

2. Based on the cash flow statement, write a short paragraph explaining the major sources and uses of cash by HiDef Films during 2012.

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search