Here are comparative balance sheets for Velo Company. VELO COMPANY Comparative B

Question

Here are comparative balance sheets for Velo Company. VELO COMPANY Comparative Balance Sheets December 31 ssets Cash Accounts receivable Inventory Land Equipment Accumulated depreciation-equipment 2015 $62,930 85,630 170,230 74,670 269,510 (66,440) $596,530 2014 $21,950 76,290 188,940 101,900 199,530 (31,560) $557,050 Tota Liabilities and Stockholders' Equit Accounts payable Bonds payable Common stock ($1 par) Retained earnings $39,240 150,630 214,130 192,530 $596,530 $47,470 203,650 175,850 130,080 $557,050 Total Additional information: 1. Net income for 2015 was $93,710. 2. Cash dividends of $31,260 were declared and paid 3. Bonds payable amounting to $53,020 were redeemed for cash $53,020 4. Common stock was issued for $38,280 cash. 5. No equipment was sold during 2015, but land was sold at cost Prepare a statement of cash flows for 2015 using the indirect method. (Show amounts that decrease cash flow with either a sign e.g. -15,000, or in parenthesis e.g. (15,000).)

Explanation / Answer

Answer

Cash flow Statement(VELO Company) for the year 2015 (Indirect method)

Figures in $

Particulars

Amount

Cash flow from operating activity

Net income

93710

Depreciation on equipment

34880

(66440-31560)

Accounts Receivable

-9340

(76290-85630)

Inventory

18710

(188940-170230)

Accounts payable

-8230

(39240-47470)

Cash flow from operating activity

(a)

129730

Cash flow from Investing activity

Sale of land

27230

(101900-74670)

Purchase of the equipment

-69980

(199530-269510)

Cash flow from Investing activity

(b)

-42750

Cash flow from Financing Activity

Cash dividend

-31260

Redemption of bonds

-53020

Common stock issue

38280

Cash flow from financing activity

(c )

-46000

Cash inflow during the year

(a+b+c)

40980

Opening Cash balance

d

21950

Closing Cash balance

e

62930

Cash inflow during the year   (e-d)

40980

Cash flow Statement(VELO Company) for the year 2015 (Indirect method)

Figures in $

Particulars

Amount

Cash flow from operating activity

Net income

93710

Depreciation on equipment

34880

(66440-31560)

Accounts Receivable

-9340

(76290-85630)

Inventory

18710

(188940-170230)

Accounts payable

-8230

(39240-47470)

Cash flow from operating activity

(a)

129730

Cash flow from Investing activity

Sale of land

27230

(101900-74670)

Purchase of the equipment

-69980

(199530-269510)

Cash flow from Investing activity

(b)

-42750

Cash flow from Financing Activity

Cash dividend

-31260

Redemption of bonds

-53020

Common stock issue

38280

Cash flow from financing activity

(c )

-46000

Cash inflow during the year

(a+b+c)

40980

Opening Cash balance

d

21950

Closing Cash balance

e

62930

Cash inflow during the year   (e-d)

40980

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