The following information is related to Alpha Company\'s fiscal year 2017. Incom

Question

The following information is related to Alpha Company's fiscal year 2017. Income Statement: Net Income $300,000 Depreciation Expense 50,000 Gain on Sale of Plant Assets 5,000 Interest Expense 500 Balance Sheet - 12/31/17: Increase (Decrease) Accounts Payable ($4,000) Plant Assets - Purchased 250,000 Plant Assets - Disposals (100,000) Additional Information: Cash Balance- 12/31/2016: $50,000 Common Stock exchanged for outstanding Long Term Notes Payable of $125,000 Dividends paid were $30,000 Use this information to prepare the statement of cash flows for Alpha Company using the indirect method.

Explanation / Answer

ans)

Statement of cash flows:

Cash flows from operations:

Net income ( Net loss) $300,000

Adjustments to Net income:

Depreciation expense 50,000

Amounts payable decrease (4000)

Gain on sale of plant assets (5000)

Cash flows from operating activities $341,000

Cash flows from investing:

Proceeds from disposal of plant assets 105000

Purchase of plant assets (250,000)

Cash flows from investing activities (145,000)

Cash flows from financing:

Dividends paid (30,000)

Cash flows from financing activities (30,000)

Decrease in cash $166000

Cash balance at january 1, 2017 50,000

Cash balance at december 31, 2017 216000

Cash investing / financing activities:

Cash used common stock to retire long term note 125000

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