Comparative balance sheets for Will Smith Company are presented below. Additiona

Question

Comparative balance sheets for Will Smith Company are presented below. Additional information: Net income for 2015 was $125,000 Bonds payable amounting to $50,000 were redeemed for cash $50,000. Common stock was issued for $30,000 cash. Sales for the year were $978,000. Prepare the operating activities section in the statement of cash flows for 2015 using the indirect method Prepare the investing activities section in the statement of cash flows for 2015. 3. Prepare the financing activities section in the statement of cash flows for 2015.

Explanation / Answer

Particulars $ $ $ Net Income 125000 Adjustments for: Depreciation 24000 Decrease in inventory 9000 Increase in accounts receivable -9000 Decrease in accounts payable -13000 11000 Cash Flow From Operating Activities 136000 sale of Land 20000 purchase of equipment -60000 Cash Flow from investing activities -40000 issue of common stock 30000 redemption of bonds payable -50000 Dividend paid (134000+125000 - 219000) -40000 Cash flow from financing activites -60000 Net cash flow during the year 36000 Add: beginning cash balance 22000 Ending Cash balance 58000

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