Statement of Cash Flows—Indirect Method The comparative balance sheet of Mavenir

Question

Statement of Cash Flows—Indirect Method

The comparative balance sheet of Mavenir Technologies Inc. for December 31, 2014 and 2013, is shown as follows:

The following additional information was taken from the records:

The investments were sold for $139,000 cash.

Equipment and land were acquired for cash.

There were no disposals of equipment during the year.

The common stock was issued for cash.

There was a $84,040 credit to Retained Earnings for net income.

There was a $47,720 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required.

                                    Mavenir Technologies Inc.

                                 Statement of Cash Flows

                           For the Year Ended December 31,2014

Dec. 31, 2014 Dec. 31, 2013 Assets Cash $311,790 $288,370 Accounts receivable (net) 112,950 103,570 Inventories 318,860 306,640 Investments 0 118,800 Land 163,540 0 Equipment 351,790 271,110 Accumulated depreciation-equipment (82,360) (73,110) Total $1,176,570 $1,015,380 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $212,960 $200,030 Accrued expenses payable (operating expenses) 21,180 26,400 Dividends payable 11,770 9,140 Common stock, $10 par 63,530 49,750 Paid-in capital in excess of par-common stock 238,840 138,090 Retained earnings 628,290 591,970 Total $1,176,570 $1,015,380

Explanation / Answer

Mavenir Technologies Inc. Statement of Cash Flows For the Year Ended December 31,2014 Cash flows from operating activities: Net income $84,040 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation $9,250 Gain on sale of investments -$20,200 Changes in current operating assets and liabilities: Increase in accounts receivable -$9,380 Increase in inventories -$12,220 Increase in accounts payable $12,930 Decrease in accrued expenses -$5,220 Net cash flow from operating activities -$24,840 Cash flows from investing activities: Cash received from sale of investments $139,000 Less cash paid for purchase of land -$163,540 Less cash for purchase of euipment -$80,680 -$244,220 Net cash flow used for investing activities -$105,220 Cash flows from financing activities: Cash received from sale of common stock $114,530 Less cash paid for dividends -$38,950 $153,480 Net cash flow provided by financing activities Increase in cash $23,420 Cash at beginning of the year $288,370 Cash at the end of the year $311,790

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