Additional information: In 2018, dividends were declared and paid. Prepare a sta

Question

Additional information:

In 2018, dividends were declared and paid.

Prepare a statement of cash flows using the indirect method for 2018. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

1. Net income was $32,000 in 2018. 2. Depreciation expense was $15,000 in 2018. 3. In 2018, no new bank loans were received. 4. In 2018, no furniture was purchased, but some furniture was sold for $8,000, which resulted in a gain on this disposal of $4,000. 5. No common shares were issued during the year but some were reacquired at the cost at which they were originally issued.

In 2018, dividends were declared and paid.

Prepare a statement of cash flows using the indirect method for 2018. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

The comparative statement of financial position for Wildhorse Retailers Ltd. follows: WILDHORSE RETAILERS LTD Statement of Financial Position December 31 Assets Cash Accounts receivable Inventory Furniture Accumulated depreciation Total assets 2018 2017 0 18,000 76,000 49,000 225,000 170,000 134,000 167,000 (28,000) (42,000) $407,000 $362,000 Liabilities and Shareholders' Equity Bank overdraft Accounts payable Bank loan payable (noncurrent) Common shares Retained earnings Total liabilities and shareholders' equity $407,000 $ 14,000 $ 67,000 42,000 94,000 105,000 54,000 64,000 178,000 151,000 $362,000

Explanation / Answer

WILDHORSE RETAILERS LTD Cash Flow Statement   For year ended 31 December 2018 Cash flows from operating activities Net Income $   32,000 Adjustment to reconcile net income to: Depreciation expense $   15,000 Gain on sale of furniture $   (4,000) Increase in accounts receivable $ (27,000) Increase in inventory $ (55,000) Increase in accounts payable $   25,000 $ (46,000) Net cash provided by operating activities $ (14,000) Cash flows from investing activities Proceeds from sale of furniture $      8,000 Net cash provided by investing activities $      8,000 Cash flows from financing activities Repurchase of common shares $ (10,000) Bank overdraft $   14,000 Repayment of bank loan $ (11,000) Dividend paid $   (5,000) $178,000-$32,000-$151,000 Net cash provided by financing activities $ (12,000) Net increase in cash and cash equivalents $ (18,000) Cash and cash equivalents at beginning of period $   18,000 Cash and cash equivalents at end of period $             -

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