PROBLEM 13-14 Prepare a Statement of Cash Flows (Indirect Method) Comparative fi

Question

PROBLEM 13-14 Prepare a Statement of Cash Flows (Indirect Method) Comparative financial statements for Shores Inc. follow: (LO2,LO3) SHORES INC. Comparative Balance Sheet December 31, Year 2 and Year I Year 2 Year I Assets Cash Accounts receivable. $ 18 233 168 355 120 12 612 (97) 475 Less accumulated depreciation 17 Total assets. $1,027 $833 Liabilities and Stockholder's Equity $225 74 174 36 254 70 321 62 . . Accrued liabilities. Bonds payable Deferred income taxes Common stock . Retained earni 288 .. 205 .. 106 $833 Total liabilities and stockholders' equity.3 SHORES INC Income Statement For the Year Ended December 31, Year 2 Sales Less cost of goods sold Gross margin .. 215 s operating expenses .

Explanation / Answer

Cash flow indirect method Cash flow from operating activities Cash flow from Financing activities Net income 67 Adjustments to reconcile the net income Bonds payable 114 Gain on sale -7 Common stock -49 Depreciation expense 15 Loss on sale of equipment 4 Dividend paid -31 Changes in current asset and liabilities Increase in prepaid expense -7 Increase in accounts receivable -122 Cash flow from Financing activities 34 decrease in Inventory 48 Increase in accounts payable 96 Net Cash and cash equivalent -10 decrease in Acrued liabilities -12 Add Beginning cash and cash equivalent 18 Increase in deferred income tax 9 Ending cash and cash equivalent 8 24 Cash flow from operating activities 91 Cash flow from Investing activities Sales of long term investment 12 Equipment purchased -157 Equipment sold 10 Cash flow from Investing activities -135

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