A comparative balance sheet for Alpha Company appears below: Alpha COMPANY Compa
ID: 2468020 • Letter: A
Question
A comparative balance sheet for Alpha Company appears below: Alpha COMPANY Comparative Balance Sheet Dec. 31, 2015 Dec. 31, 2014 Assets Cash $ 23,000 $10,000 Accounts receivable 18,000 14,000 Inventory 27,000 18,000 Prepaid expenses 6,000 9,000 Long-term investments -0- 18,000 Equipment 60,000 32,000 Accumulated depreciation—equipment (18,000) (14,000) Total assets $116,000 $87,000 Liabilities and Stockholders' Equity Accounts payable $ 17,000 $ 7,000 Bonds payable 37,000 47,000 Common stock 40,000 23,000 Retained earnings 22,000 10,000 Total liabilities and stockholders' equity $116,000 $87,000 Additional information: 1. Net income for the year ending December 31, 2015 was $24,000. 2. Cash dividends of $12,000 were declared and paid during the year. 3. Long-term investments that had a cost of $18,000 were sold for $16,000. 4. Sales for 2015 were $150,000. Instructions Prepare a statement of cash flows for the year ended December 31, 2015, using the indirect method.
Explanation / Answer
Statement of Cash Flow Particulars Amount Total Amount Income 24,000.00 Loss on sale of invt 2,000.00 Depreciation 4,000.00 Increase in AR (4,000.00) Increase in inventory (9,000.00) Decrease in prepaid Expenses 3,000.00 Increase in AP 10,000.00 Cash flow from operating activities 30,000.00 Cash flow from Investing activities Sale of invt 16,000.00 Purchase of PPE (28,000.00) Sale of PPE (12,000.00) Cash flow from Investing activities Cash flow from Financing activities Issue of Stock 17,000.00 Reddemption of Bonds (10,000.00) Dividends Paid (12,000.00) Cash flow from Financing activities (5,000.00) Opening cash and cash equivalents 10,000.00 Closing cash and cash equivalents 23,000.00
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