Using the indirect approach, prepare a statement of cash flows for Ozark for the

Question

Using the indirect approach, prepare a statement of cash flows for Ozark for the year ending December 31, 20X5. Comparative balance sheets for Ozark follow.

OZARK CORPORATION Balance Sheet December 31, 20X4 and 20X5 Assets 20X5 20X4 Cash $          458,700 $          471,450 Accounts receivable              199,250              171,500 Inventories              248,600              278,800 Prepaid insurance                13,000                11,000 Land              250,000              250,000 Building and equipment           1,500,000           1,300,000 Less: Accumulated depreciation             (205,000)             (180,000) Total assets $       2,464,550 $       2,302,750 Liabilities Accounts payable $            85,700 $            93,400 Interest payable                10,500                15,000 Income taxes payable                22,000                 8,000 Stockholders' equity Common stock              710,000              700,000 Paid in capital in excess of par              990,000              900,000 Retained earnings              646,350              586,350 Total liabilities and equity $       2,464,550 $       2,302,750 Cash flows from operating activities: Net income   $                      - Add (deduct) noncash effects on operating income   Depreciation expense   $                     - Increase in accounts receivable                          - Decrease in inventory                          - Increase in prepaid insurance                        - Decrease in accounts payable                        - Decrease in interest payble                        - Increase in income taxes payable                        -                          - Net cash provided by operating activities   $                      - Cash flows from investing activities: Purchase of equipment $                     - Net cash used by investing activities                          - Cash flows from financing activities: Proceeds from issuing stock $                     - Dividends on common                        - Net cash provided by financing activities                          - Net decrease in cash $                      - Cash balance at January 1, 20X5                          - Cash balance at December 31, 20X5 $                      -

Explanation / Answer

Cash Flow from Operating Activities Net Income 60000 Depreciation 25000 Increase in Accounts Receivable -27750 Decrease in Inventory 30200 Increase in Prepaid Expense -2000 Decrease in Accounts Payable -7700 Decrease in Interest Payable -4500 Increase in Income taxes Payable 14000 Net Cash 87250 Cash Flow from Investing Activities Purchase of equipment -200000

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