Exercise 13-11 The following items were gathered from Sandhill Industries’ gener

Question

Exercise 13-11

The following items were gathered from Sandhill Industries’ general ledger:

Using the indirect method, construct Sandhill Industries’ statement of cash flows. (Show amounts that decrease cash flow with either a - sign, e.g. -15,000 or in parentheses, e.g. (15,000).)

Sandhill Industries
Statement of Cash Flows

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Sale of marketable securities $ 13,910 Depreciation and amortization expense 24,622 Payment of cash dividends 3,043 Proceeds from disposal of equipment 919 Loss on disposal of equipment 220 Net income 26,433 Beginning Cash balance 19,100 Purchase of equipment 21,772 Decrease in Accounts Receivable 1,378 Proceeds from issuing common stock 2,151 Increase in Inventory 3,625 Increase in Accounts Payable 4,940 Ending Cash balance 65,233

Explanation / Answer

Using the indirect method, construct Sandhill Industries’ statement of cash flows.

Cash flow from operating activities Net income 26433 Adjustment to reconcile net income Depreciation and amortization expense 24622 Loss on disposal of equipment 220 Increase inventory -3625 Decrease in Accounts Receivable 1378 Increase in Accounts Payable 4940 Net cash flow from operating activities 53968 Cash flow from investing activities Sale of marketable securities 13910 Proceeds from disposal of equipment 919 Purchase of equipment -21772 Net cash flow from investing activities -6943 Cash flow from financing activities Proceeds from issuing common stock 2151 Payment of dividend -3043 Net cash flow from financing activities -892 Net cash flow 46133 Beginning cash 19100 Ending cash 65233

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