Problem-Solving Strategy eBook Statement of Cash Flows-Indirect Method The compa

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Problem-Solving Strategy eBook Statement of Cash Flows-Indirect Method The comparative balance sheet of Amelia Enterprises, Inc. at December 31, 2014 and 2013, is as follows: Dec. 31,Dec. 31 2014 20 1 Assets Cash Accounts receivable (net) Merchandise inventory Prepaid expenses Equipment Accumulated depreciation-equipment $80,100 $97,750 123,080 131,780 175,840 163,330 4,950 358,180 292,630 (93,130) (71,770) $651,230 $618,670 7,160 Total Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) Mortgage note payable Common stock, $1 par Paid-in capital in excess of par-common stock Retained earnings $136,760 129,300 185,600 13,000 326,000 174,000 116,770 651,230 $618,670 21,000 167,470 Total Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2014 are as follows: a. Net income, $129,790. b. Depreciation reported on the income statement, $45,650. c. Equipment was purchased at a cost of $89,840, and fully depreciated equipment costing $24,290 was discarded, with no salvage realized d. The mortgage note payable was not due until 2016, but the terms permitted earlier payment without penalty e. 8,000 shares of common stock were issued at $20 for cash. Cash dividends declared and paid, $79,090. Required

Explanation / Answer

Description Amount Amount Cash flow from operating activity     176,880 Net profit      129,790 Loss on sale of land Add non cash expense Depreciation         45,650 Adjustment for change in working capital Change in AR           8,700 Change in inventory      (12,510) Change in prepaid rent         (2,210) Change in AP           7,460 Cash flow from Financing activity (104,690) Issue of new shares           8,000 Issue of new shares-Security premium      152,000 Repayment of Mortgage    (185,600) Dividends paid      (79,090) Cash flow from Investing activity     (89,840) Sale of Land Purchase of Equipment      (89,840) Sale of PPE Total of above     (17,650) Opening cash balance        97,750 Closing Cash balance        80,100 In BS        80,100 Variance                 -   Opening Accumulated Dep         71,770 Year Depreciatin         45,650 total      117,420 Less Closing accumulated dep      (93,130) Depreciation reversal for sold asset         24,290 Opening Fixed asset      292,630 New equipment         89,840 total      382,470 Less Closing fixed assets    (358,180) Discarded assets         24,290

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