Use the following information regarding the Newcastle Corporation to prepare a s

Question

Use the following information regarding the Newcastle Corporation to prepare a statement of cash flows using the indirect method:

Remember to use negative signs with answers when appropriate.

Accounts payable decrease $6,000 Accounts receivable increase 8,400 Wages payable decrease 3,600 Amortization expense 19,200 Cash balance, January 1 36,000 Cash balance, December 31 8,400 Cash paid as dividends 7,200 Cash paid to purchase land 120,000 Cash paid to retire bonds payable at par 90,000 Cash received from issuance of common stock 54,000 Cash received from sale of equipment 14,400 Depreciation expense 46,800 Gain on sale of equipment 16,800 Inventory increase 15,600 Net income 115,200 Prepaid expenses increase 9,600

Explanation / Answer

NEWCASTLE CORPORATION Statement of Cash Flows For Year Ended December 31 Cash Flow from Operating Activities Net Income 115200 Add (deduct) items to convert net income to cash basis Depreciation 46800 Amortization 19200 Gain on Sale of Equipment -16800 Accounts Receivable Increase -8400 Inventory Increase -15600 Prepaid Expenses Increase -9600 Accounts Payable Decrease -6000 Wages Payable Decrease -3600 Cash Flow Provided by Operating Activities 121200 Cash Flow from Investing Activities Sale of Equipment 14400 Purchase of Land -120000 Cash Used by Investing Activities -105600 Cash Flow from Financing Activities Issuance of Common Stock 54000 Retirement of Bonds Payable -90000 Payment of Dividends -7200 Cash Used by Financing Activities -43200 Net Decrease in Cash -27600 Cash at Beginning of Year 36000 Cash at End of Year 8400

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