Here are comparative balance sheets for Velo Company. VELO COMPANY Comparative B

Question

Here are comparative balance sheets for Velo Company. VELO COMPANY Comparative Balance Sheets December 31 ssets Cash Accounts receivable Inventory Land Equipment Accumulated depreciation-equipment 2016 $22,000 76,000 189,000 100,000 200,000 2017 $63,000 85,000 170,000 75,000 270,000 (66,000) (32,000) $597,000 $555,000 Total Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock ($1 par) Retained earnings $39,000 $47,000 50,000 200,000 216,000 1 192,000 597,000 $555,000 174,000 134,000 Total Additional information: 1. Net income for 2017 was $93,000. 2. Cash dividends of $35,000 were declared and paid. 3. Bonds payable amounting to $50,000 were redeemed for cash $50,000. 4. Common stock was issued for $42,000 cash. 5. No equipment was sold during 2017, but land was sold at cost. Prepare a statement of cash flows for 2017 using the indirect method. (Show amounts that decrease cash flow with either a -sign e.g.-15,000, or in parenthesis e.g. (15,000).)

Explanation / Answer

Statement of cash flow

Cash flow from opreating activities

Net income 93000

Add: Depreciation   34000

127000

less: increase in accounts receivable (9000)

add: decrease in inventory 19000

less: decrease in accounts payable (8000)

Net cash provided by operating activities 129000

Cash flow from financing ativities

Common stock issued 42000

Dividend (35000)

redemption of bond   (50000)

net Cash used by financing ativities (43000)

Cash flow from investing activities

purchase of equipment (70000)

sale of land 25000

net Cash used by investing activities (45000)

Net increase in cash 41000

Add: cash in beginning 22000

Cash at end 63000

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