Using Excel, prepare the Statement of Cash Flows Indirect Method. Your SOCF shou

Question

Using Excel, prepare the Statement of Cash Flows Indirect Method. Your SOCF should be based upon the income statement and the additional information below:
Additional Information:
•   Increase in Accounts Receivables=$4,000
•   Increase in Accounts Payables=$16,000
•   Increase in Income Taxes Payable=$300
•   Decrease in Prepaid Expenses=$10,000
•   Decrease in Merchandise Inventory=$14,000
•   Decrease in Long Term Notes Payable=$20,000
•   Cash Paid to Purchase Land=$50,000
•   Cash Paid to Purchase Equipment=$15,000
•   Cash Paid to Retire Bonds=$25,000
•   Cash Paid to for Dividends=$10,000
•   Cash Received from the Sale of common stock=$50,000
•   Cash at the start of the year=$24,000
Part 2: Direct Method
Using Excel and the below information please prepare the complete statement of cash flows using the direct method.
Additional Information:
•   Cash Received from Customers=$80,000
•   Cash Payments for Merchandise=$10,000
•   Cash Payments for Operating Expenses=$5,000
•   Cash payments for Interest=$6,000
•   Cash Payments for Income Taxes=$3,000

For the Year Ended December 31, 2011 $248,000 $116,000 $132,000 Sales Cost of Goods Sold Gross Profit Operating Expenses $44,000 $16,000 $30,000 Wages and Salaries Expense Rent Expense Depreciation Expense Other Operating Expenses $108,000 $24,000 $26,000 $50,000 $17,500 32,500 $18,000 Income from Operations Gain on Sale of Equipment Income before Income Taxes Income Tax Expense Net Income

Explanation / Answer

Cash Flow Statement (Indirect Method) For the year ended Dec. 31, 2011 Particulars Amount I. Cash Flow from operation Income before Income Tax          50,000 Adjustment for Non-cash and Non-Operating Items Add: Depreciation exp.               30,000 Gain on sale of Equipment             (26,000)             4,000 Operating Profit before changes in Working Capital          54,000 Less: Increase in Accounts Receivables               (4,000) Add: Increase in Accounts Payables               16,000 Add: Decrease in Prepaid Expenses               10,000 Add: Decrease in Merchandise Inventory               14,000          36,000 Cash generated from operations          90,000 Less: I Tax Paid        (17,200) Cash Flow from (Used in) Operating activities          72,800 II. Cash Flow from Investing Activities Purchase of land             (50,000) Purchase of equipment             (15,000) Cash Flow from (Used in) Investing Activities        (65,000) II. Cash Flow from Financing Activities Decrease in Long Term Notes Payables             (20,000) Redemption of Bonds             (25,000) Dividends Paid             (10,000) Sale of Common Stock               50,000 Cash Flow from (Used in) Financing Activities          (5,000) Net Increase/Decrease in Cash             2,800 Cash at the Beginning          24,000 Cash At the end          26,800

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