Exaircise 17-8 Hare ire cmprative balau shouts for Vlo Compaty 72,600 1,200 187

ID: 2398135 • Letter: E

Question

Exaircise 17-8 Hare ire cmprative balau shouts for Vlo Compaty 72,600 1,200 187 400 03,500 199,700 260,100 $35,100 148200 203,700 195,400 47 300 Common stock (53 pa) 133,600 Nt income for 2017 was$101,600 2. Cash dividends of $.39,800 mire d dared and paid. 3 Bonds payable amounting to $55,500eredoumid for cash $55,500 4Common slock was issud for $42,100 sh No quipment ms sold durind 2017, but land was sold at c Prepir ù à sialiament of ??h ?? s for 2017 usiriq the nated method. Show' amounts that decrease cash flow witn either a sign e.g. 15,000, or in Prenthesis ..g. (15,000). )

Explanation / Answer

Solution:

VELO COMPANY

Statement of Cash Flow (Indirect Method)

For the Year Ended December 31, 2017

Cash Flow from Operating Activities:

Net Income

$101,600

Adjustments to reconcile net income to

Net cash flow from operating activities

Depreciation Expense (65,500 - 33,600)

$31,900

Increase in Accounts Receivable (86,100 - 71,200)

-$14,900

Decrease in Inventories (187,400 - 169,800)

$17,600

Decrease in Accounts Payable (47,300 - 35,100)

-$12,200

$22,400

Net Cash provided by Operative Activities

$124,000

Cash Flow from Investing Activities:

Cash received from sale of land (101,500 - 72,600)

$28,900

Cash paid for purchase of equipment (260,100 - 199,700)

-$60,400

Net Cash used by Investing Activities

-$31,500

Cash Flow from Financing Activities:

Cash paid to redeem the bonds payable

-$55,500

Cash Dividend Paid

-$39,800

Cash received from issuance of Common Stock

$42,100

Net Cash used by Financing Activities

-$53,200

Net Increase/(Decrease) in Cash and Cash Equivalents

$39,300

Cash and Cash Equivalents at the beginning of the year

$33,300

Cash and Cash Equivalents at the end of the year

$72,600

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