The following is selected information from Rayco Company for the fiscal years en
ID: 2484411 • Letter: T
Question
The following is selected information from Rayco Company for the fiscal years ended December 31, 2014: Rayco Company had net income of $1, 225,000. Depreciation was $500,000, purchases of plant assets were $1, 250,000, and disposals of plant assets for $500,000 resulted in a $50,000 gain. Stock was issued in exchange for an outstanding note payable of $725,000. Accounts receivable decreased by $25,000. Accounts payable decreased by $40,000. Dividends of $300,000 were paid to shareholders. Rayco Company had interest expense of $50,000. Cash balance on January 1, 2014 was $250,000. PreDare Ravco Company's statement of cash flows for the year ended December 31, 2014 using the indirect method.Explanation / Answer
Rayco Company Statement of Cash Flows for the year ended 12.31.2014 Cash Flows from Operating Activities Net Income $ 1,225,000.00 Adjustments to reconcile net income to net cash provided by operating activities Depreciation on Fixed Assets $ 500,000.00 Interest Expense $ 50,000.00 Gain on the sale of Plant $ (50,000.00) Increase/Decrease in current Assets: Decrease in Accounts Receivable $ 25,000.00 Increase/Decrease in current liabilities: Decrease in Accounts Payable $ (40,000.00) Net Cash Provided by Operating Activities $ 1,710,000.00 Cash Flows from Investing activities Purchase of Plant $ (1,250,000.00) Sale of Plant $ 500,000.00 Net Cash used in Investing Activities $ (750,000.00) Cash Flows from Financing Activities Outstanding Notes Payable $ 725,000.00 Dividends Paid $ (300,000.00) Net Cash Provided in Financing Activities $ 425,000.00 Net Increase/Decrease in Cash $ 1,385,000.00 Beginning Cah Balance $ 250,000.00 Ending Cash Balance $ 1,635,000.00
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