Sharp Screen Films, Inc., is developing its annual financial statements at Decem

Question

Sharp Screen Films, Inc., is developing its annual financial statements at December 31, 2015. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: 2015 2014 Balance sheet at December 31 Cash $ 65,650 $ 64,500 Accounts receivable 16,250 23,350 Merchandise inventory 23,350 18,600 Property and equipment 210,550 152,000 Less: Accumulated depreciation (60,400 ) (46,250 ) $ 255,400 $ 212,200 Accounts payable $ 10,300 $ 20,400 Wages payable 3,300 3,600 Note payable, long-term 61,600 72,500 Contributed capital 100,300 66,400 Retained earnings 79,900 49,300 $ 255,400 $ 212,200 Income statement for 2015 Sales $ 200,000 Cost of goods sold 97,000 Depreciation expense 14,150 Other expenses 43,500 Net income $ 45,350 Additional Data: a. Bought equipment for cash, $58,550. b. Paid $10,900 on the long-term note payable. c. Issued new shares of stock for $33,900 cash. d. Dividends of $14,750 were declared and paid. e. Other expenses all relate to wages. f. Accounts payable includes only inventory purchases made on credit. Required: 1. Prepare the statement of cash flows using the indirect method for the year ended December 31, 2015. (List cash outflows as negative amounts.)

Explanation / Answer

CASH FLOW FOR THE YEAR 2015 Cash flow from operating activities:     $ Net profit as per Income statement 45350 Depreciation for the year 14150 Cash from operations before working capital 59500                                                                adjustments Decrease in Debtors 7100 Increase in Inventory -4750 Decrease in Accounts Payable -10100 Decrease in Wages Payable -300 Cash from Operating activities 51450 Cash flow from Investing Activities Equipment purchased -58550 -58550 Cash flow from financing activities New shares 33900 Dividends paid -14750 LT Notes paid -10900 8250 Cash flow from Operating, Investing & Financing Activities 1150                                                                  Opening Balance of Cash 64500 Closing Balance of Cash 65650

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