MANAGERIAL ACCOUNTING HANDouT PROBLEM 14 Score Name Section Problem (10 points).

Question

MANAGERIAL ACCOUNTING HANDouT PROBLEM 14 Score Name Section Problem (10 points). New Jersey Corporation's comparative balance sheets as of June 10, 20x7 and 20x6 and its 20x7 income statement are attached. The following additional information is available for the company for 20x7. Equipment that cost $24,000 with accumulated depreciation of S17,000 was sold at a loss of $4,000. Land and building were purchased in the amount of S100,000 by issuing a mortgage payable in the same amount. (C) A payment of $20,000 was made on the mortgage payable. (d) Cash dividends in the amount of $60,000 were paid during the year. REQUIRED: Prepare a statement of cash flows, using the indirect method, for New Jersey Corporation for the year ending June 30, 20x7.

Explanation / Answer

Statement of cash flow :

Cash flow from operating activities Net income 119600 Adjustment to reconcile net income Depreciation 60000 Loss on disposal of equipment 4000 Decrease account receivable 20000 Increase inventory 40000 Decrease prepaid expenses 400 Increase account payable 22000 Decrease short term payable (50000) Increase income tax payable 8000 Net cash flow from operating activities 224000 Cash flow from investing activities Sale of equipment 3000 Net Cash flow from investing activities 3000 Cash flow from Financing activities Mortgage paid (20000) Dividend paid (60000) Net Cash flow from Financing activities (80000) Net cash flow 147000 Beginning cash 20000 Ending cash 167000

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