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 $126,560 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 $66,100 credit to Retained Earnings for net income.

There was a $43,450 debit to Retained Earnings for cash dividends declared.

Dec. 31, 2014 Dec. 31, 2013 Assets Cash $278,710 $262,560 Accounts receivable (net) 100,970 94,300 Inventories 285,030 279,180 Investments 0 108,170 Land 146,190 0 Equipment 314,470 246,840 Accumulated depreciation-equipment (73,620) (66,560) Total $1,051,750 $924,490 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $190,370 $182,120 Accrued expenses payable (operating expenses) 18,930 24,040 Dividends payable 10,520 8,320 Common stock, $10 par 56,790 45,300 Paid-in capital in excess of par-common stock 213,510 125,730 Retained earnings 561,630 538,980 Total $1,051,750 $924,490 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 Cash flows from operating activities: Adjustments to reconcile net income to net cash flow from operating activit Changes in current operating assets and liabilities Net cash flow from operating activities Cash flows from investing activities: Net cash flow used for investing activities

Explanation / Answer

Mavenir Technologies Inc. CASH FLOW STATEMENT FOR THE YEAR ENDED December 31, 2014 2014 Rs. A. CASH FLOW FROM OPERATING ACTIVITIES Net Income transferred to retained earnings                66,100 Adjustments for: Depreciation and Amortisation                  7,060 Gain on sale of investment               (18,390) Operating Profit before Working Capital Changes                54,770 Adjustments for: Inventories                (5,850) Accounts receivables                (6,670)               (12,520) Accounts payable (merchandise creditors)                  8,250 Accrued expenses payable (operating expenses)                (5,110)                (9,380) Cash generated from Operations                45,390 Net Cash (used in)/ from Operating Activities               45,390 B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Land             (146,190) Purchase of Equipment               (67,630) Sale of Investment              126,560 Net Cash (used in) Investing Activities             (87,260) C. CASH FLOW FROM FINANCING ACTIVITIES Issuance of Common Stock                11,490 Paid-in capital in excess of par-common stock                87,780 Cash Dividends Declared               (43,450) Increase in dividends payable                  2,200 Net Cash from Financing Activities               58,020 Net increase/ (decrease) in cash and cash equivalents               16,150 Cash and cash equivalents as at January 1, 2014:             262,560 Cash and Bank Balances as at December 31, 2014             278,710

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