The balance sheet for Plasma Screens Corporation, along with additional informat

Question

The balance sheet for Plasma Screens Corporation, along with additional information, are provided below:

Additional Information for 2018:

1. Net income is $66,000.

2. The company purchases $107,000 in equipment.

3. Depreciation expense is $159,000.

4. The company repays $112,500 in notes payable.

5 .The company declares and pays a cash dividend of $23,500.

Required:

Prepare the statement of cash flows using the indirect method.

PLASMA SCREENS CORPORATION
Balance Sheets
December 31, 2018 and 2017 2018 2017   Assets:   Current assets:       Cash $ 142,950    $ 154,000          Accounts receivable 76,800    90,500          Inventory 92,000    77,300          Prepaid rent 3,400    1,700      Long-term assets:       Land 465,000    465,000          Equipment 762,000    655,000          Accumulated depreciation (421,000)   (262,000)             Total assets $ 1,121,150    $ 1,181,500      Liabilities and Stockholders' Equity:   Current liabilities:       Accounts payable $ 96,000    $ 82,300          Interest payable 6,750    13,500          Income tax payable 7,400    4,700      Long-term liabilities:       Notes payable 112,500    225,000      Stockholders' equity:       Common stock 685,000    685,000          Retained earnings 213,500    171,000             Total liabilities and stockholders' equity $ 1,121,150    $ 1,181,500   

Explanation / Answer

statement of cash flows using the indirect method is as prepared below:

Plasma Screens Corporation Statement of Cash Flows For the Year Ended December 31,2018 Cash Flows From Operating Activities Net Income (Given) 66,000 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense 159,000 Decrease in Accounts Recievable (76,800-90,500) 13,700 Increase in Inventory (92,000-77,300) -14700 Increase in prepaid rent (3,400-1,700) -1,700 Increase in accounts payable (96,000-82,300) 13,700 Decrease in interest payable (6,750-13,500) -6,750 Increase in Income tax payable (7,400-4,700) 2,700 Net Cash Provided by Operating Activities 231,950 Cash Flows From Investing Activities Purchase of Equipment -107,000 Net Cash Used by Investing Activities -107,000 Cash Flows From Financing Activites Notes payable repaid -112,500 Payments of Cash Dividends -23,500 Net Cash Used by Financing Activities -136,000 Net Increase in Cash -11,050 Cash at Beginning of the Year 154,000 Cash at end of Year 142,950

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