The balance sheets for Kinder Company showed the following information. Addition

Question

The balance sheets for Kinder Company showed the following information. Additional information concerning transactions and events during 2015 are presented below.

December 31

2015

2014

$ 41,285

$ 11,730

44,045

23,345

40,250

48,300

0

17,250

271,975

$354,200

$244,375

$ 19,550

$ 30,475

24,150

19,550

80,500

57,500

149,500

103,500

80,500

33,350

$354,200

$244,375

Additional data:

Prepare a statement of cash flows (using the indirect method) for 2015 for Kinder Company. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Kinder Company
Statement of Cash Flows
For the Year Ended December 31, 2015
Increase (Decrease) in Cash

Kinder Company
Balance Sheet

December 31

2015

2014

Cash

$ 41,285

$ 11,730

Accounts receivable (net)

44,045

23,345

Inventory

40,250

48,300

Long-term investments

0

17,250

Property, plant & equipment

271,975

172,500 Accumulated depreciation (43,355) (28,750)

$354,200

$244,375

Accounts payable

$ 19,550

$ 30,475

Accrued liabilities

24,150

19,550

Long-term notes payable

80,500

57,500

Common stock

149,500

103,500

Retained earnings

80,500

33,350

$354,200

$244,375

Explanation / Answer

Working notes:

(1) Gain on sale of machinery = $(32,200 - 17,250) = $14,950

(2) Purchase of machinery by issuing $69,000 notes payable is not a cash transaction and hence, excluded from computation.

(3) Purchase of $46,000 worth note payable by issuing common stock is not a cash transaction and hence, excluded from computation.

CASH FLOW FROM OPERATING ACTIVITIES $ Net Income 81,650 Add: Depreciation 14,605 Less: Gain on Sale of Machinery -14,950 Add: Increase in Current Liabilities       Accrued Liabilities 4,600 Less: Increase in Current Assets      Accounts receivables -20,700 Less: Decrease in Current Liabilities     Accounts Payable -10,925 Add: Decrease in Current Assets     Inventory 8,050 NET CASH FLOW FROM OPERATING ACTIVITIES (1) 62,330 CASH FLOW FROM INVESTING ACTIVITIES $ Long term Investments 17,250 Machinery -24,725 Gain on Sale of Machinery 14,950 NET CASH FLOW FROM INVESTING ACTIVITIES (2) 7,475 CASH FLOW FROM INVESTING ACTIVITIES $ Dividend Paid -34,500 NET CASH FLOW FROM FINANCING ACTIVITIES (3) -34,500 NET CASH INFLOW/(OUTFLOW) DURING YEAR (1) + (2) + (3) 35,305

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