6 E23-15B (SCF-Indirect Method) Presented below are data taken from the records

Question

6 E23-15B (SCF-Indirect Method) Presented below are data taken from the records of Natural Homes Company December 31 2012 2011 Cash Current assets other than cash Long-term investments Plant assets 15,000 105,000 60,000 330,000 $510,000 $ 5,000 129,000 50,000 351,000 $535,000 Accumulated depreciation Current liabilities Bonds payable Capital stock Retained earnings $ 88,000 65,000 50,000 173,000 134,000 $510,000 $102,000 73,000 100,000 153,000 107,000 $535,000 Additional information: 1. Held-to-maturity securities carried at a cost of $25,000 on December 31, 2011, were sold in 2012 for $30,000. The gain (not extraordinary) was incorrectly charged directly to Retained Earnings. 2. Fully depreciated plant assets that cost $57,000 were sold during 2012 for $2,000. The gain (not ex- traordinary) was incorrectly charged directly to Retained Earnings. 3. Net income as reported on the income statement for the year was $40,000 4. Dividends paid amounted to $20,000 5. Depreciation charged for the year was $43,000 Instructions Prepare a statement of cash flows for the year 2012 using the indirect method

Explanation / Answer

Statement of cash flow

for the year ended 31 december 2012

Statement of cash flow

for the year ended 31 december 2012

cash flow from operating activity Net Income 40000 Adjustment to reconcile net income to cash flow Depreciation 43000 Decrease in current asset [129000-105000] 24000 Decrease in current liability [73000-65000] -8000 59000 Net cashprovided by operating activity 99000 cash flow from investing activity Purchase of long term investmnet [ 60000+25000-50000] -35000 sale of long term investment 30000 purchase of plant asset [330000+57000-351000] -36000 sale of plant asset 2000 net cash used by investing activity -39000 cash flow from financing activity Repayment of bond payable [100000-50000] -50000 issue of capital stock [173000-153000] 20000 dividend -20000 net cash used by financing activity --50000 Increase in cash [99000-39000-50000] 10000 Beginning cash 5000 cash at end 15000

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