The balance sheets for Kinder Company showed the following information. Addition
ID: 2493962 • Letter: T
Question
The balance sheets for Kinder Company showed the following information. Additional information concerning transactions and events during 2015 are presented below. Net income for the year 2015, $76,000. Depreciation on plant assets for the year, $12,700. Sold the long-term investments for $28,000 (assume gain or loss is ordinary). Purchased machinery costing $26,500, paid cash. Purchased machinery and gave a $60,000 long-term note payable. Paid a $40,000 long-term note payable by issuing common stock. Instructions Using the format provided on the next page, prepare a statement of cash flows (using the indirect method) for 2015 for Kinder Company. It may not necessary to use all available lines.Explanation / Answer
Cash flow statement for the year 2015 (Indirect Method)
CASH FLOW FROM OERATING ACTIVITIES
Net income(given) 76000
(+)Depeciation(given) 12700
(-)Profit on sale of long term investment (13000)
(-)Increase in Accounts receivable (23000)
(+)Reduction in inventory 7000
(-)Reduction in accounts payable (9500)
(+) Increase in wages payable 4000
cash flow from operating activities 54200
CHANGES IN CASH AND CASH EQUIVALENT(54200+1500-30900) 20700
(+) OPENING CASH BALANCE(given) 10200
CLOSING CASH BALANCE = 20700+10200=30900
(+)Profit for the year 76000
TOTAL 105000
(-)dividend paid (bal fig) (35000)
Closing balance of retained earnigs 70000 (10500-35000)
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