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

Question

Statement of Cash Flows—Indirect Method

The comparative balance sheet of Amelia Enterprises, Inc. at December 31, 2014 and 2013, is as follows:

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2014 are as follows:

Net income, $174,820.

Depreciation reported on the income statement, $35,630.

Equipment was purchased at a cost of $69,700, and fully depreciated equipment costing $19,080 was discarded, with no salvage realized.

The mortgage note payable was not due until 2016, but the terms permitted earlier payment without penalty.

6,000 shares of common stock were issued at $16 for cash.

Cash dividends declared and paid, $106,530.

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.

                                                        Amelia Enterprise, Inc

                                              Statement of Cash Flows

                    For the Year Ended December 31, 2014

$ insert answer

Dec. 31, 2014 Dec. 31, 2013 Assets Cash $62,740 $76,810 Accounts receivable (net) 96,410 103,540 Merchandise inventory 137,720 128,340 Prepaid expenses 5,610 3,890 Equipment 280,550 229,930 Accumulated depreciation-equipment (72,940) (56,390) Total $510,090 $486,120 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $107,120 $101,600 Mortgage note payable 0 145,840 Common stock, $1 par 16,000 10,000 Paid-in capital in excess of par-common stock 227,000 137,000 Retained earnings 159,970 91,680 Total $510,090 $486,120

Explanation / Answer

Amelia Enterprise, Inc Statement of Cash Flows For the Year Ended December 31, 2014 Cash Flow from operating activities Amount Amount Amount Net Income $174,820 Adjustment to Reconcile Net Income to net cash flow from operating activities Depreciation $35,630 Changes in current operating assets and liabilities: Decrease in Accounts Receivable 7130 Increase in Merchadise Inventory ($9,380) Increae in Prepaid expense ($1,720) Increase in Accounts Payable 5520 Net cash flow from operating activities $212,000 Cash Flow from Investment activities Cash Paid for Equipment ($69,700) Net Cash Flow used for Investment activities ($69,700) Cash Flow from Financing activities Cash received from Sale of Common Stock $96,000 Less Cash paid for dividends $106,530 Less: Cash paid to retire mortgage notes $145,840 $252,370 Net Cash Flow used in Financing activities ($156,370) Increae(Decrease) in Cash ($14,070) Cash at the Beginning of the year $76,810 Cash at the end of the year $62,740

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