The following items were gathered from Carla Vista Industries’ general ledger: U

Question

The following items were gathered from Carla Vista Industries’ general ledger:

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

Carla Vista Industries
Statement of Cash Flows

Sale of marketable securities $ 13,550 Depreciation and amortization expense 24,322 Payment of cash dividends 3,873 Proceeds from disposal of equipment 889 Loss on disposal of equipment 230 Net income 25,663 Beginning Cash balance 19,650 Purchase of equipment 21,852 Decrease in Accounts Receivable 1,148 Proceeds from issuing common stock 2,071 Increase in Inventory 3,525 Increase in Accounts Payable 4,600 Ending Cash balance 62,873

Explanation / Answer

Carla Vista Industries Statement of Cashflows   Cash flows from operating activities Net Income $ 25,663 Adjustments to reconcile net income to : Depreciation and amortization expenses $   24,322 Loss on disposal of equipment $         230 Decrease in accounts receivable $      1,148 Increase in inventory $   (3,525) Increase in accounts payable $      4,600 $ 26,775 Net cash flow from operating activities $ 52,438 Cash flows from investing activities Sale of marketable security $   13,550 Proceeds from disposal of equipment $         889 Purchase of equipment $ (21,852) Net cash used by investing activities $ (7,413) Cash flows from financing activities Proceeds from issuing common stock $      2,071 Payment of cash dividend $   (3,873) Net cash used by financing activities $ (1,802) Net Decrease in cash and cash equivalents $ 43,223 Cash and cash equivalents at beginning of period $ 19,650 Cash and cash equivalents at end of period $ 62,873

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