Presented below are data taken from the records of Alee Company. December 31, 20

Question

Presented below are data taken from the records of Alee Company.

December 31, 2014 December 31, 2013

Cash $14,730 $10,300

Current assets other than cash 84,740 58,560

Long-term investments 9,880 53,170

Plant assets 334,240 215,090

Totals: $443,590 $337,120

Accumulated depreciation $20,460 $40,390

Current liabilities 39,870 22,140

Bonds payable 74,750 –0–

Capital stock 251,600 251,600

Retained earnings 56,910 22,990

Totals: $443,590 $337,120

Additional information:

1. Held-to-maturity securities carried at a cost of $43,290 on December 31, 2013, were sold in 2014 for $33,410. The loss (not extraordinary) was incorrectly charged directly to Retained Earnings.

2. Plant assets that cost $60,600 and were 80% depreciated were sold during 2014 for $7,390. The loss (not extraordinary) was incorrectly charged directly to Retained Earnings.

3. Net income as reported on the income statement for the year was $59,650.

4. Dividends paid amounted to $11,120.

5. Depreciation charged for the year was $28,550.

Prepare a statement of cash flows for the year 2014 using the indirect method.

Explanation / Answer

Alee Company All Amounts in $ Cash Flow Statement for 2014 Cash Flows from Operating Activities Net Income per Income Statement 59650 Add : Loss on Sale of Held-to-maturity securities 0 Add : Loss on Sale of Plant Assets 0 Add : Depreciation for the year 28550 28550 Cash Flows before Working Capital changes 88200 Less : Increase in other current assets -26180 Add : Increase in Current Liabilities 17730 -8450 Net Cash Inflows from Operating Activities 79750 Cash Flows from Investing Activities Sale of Long Term Investments 33410 Sale of Plant Assets 7390 Purchase of Plant Assets -179750 -138950 Cash Flows from Financing Activities Issue of Bonds Payable 74750 Dividends Paid -11120 63630 Net Cash Inflows during the year 4430 Opening Cash and Cash Equivalents 10300 Closing Cash and Cash Equivalents 14730

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