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enow.com/ilm/takeAssignment/takeAssignmentMain.dožinvoker assignments&takeAssignmentSessionLocator-assignment-take;&inprogress; false Calculator On the basis of the following data for Breach Co. for the current and preceding years ended December 31, prepare a statement of cash flows using the indirect method. Assume that equipment costing $25,000 was purchased for cash and no long-term assets were sold during the period. Stock was issued for cash-3,200 shares at par Net income for the current year was $76,000 Cash dividends declared and paid were $13,000 Current Year Prior Year Assets Cash Accounts Receivable (net) Inventories Equipment s 170,000 78,000 106,500 395,000 $74,000 85,000 370,000 (195,000) (158,000) 554,500 $461,000 ) Accumulated Depreciation Total assets Liabilities and stockholders' equity $51,000 Accounts Payable (merchandise creditors) Taxes Payable Common Stock, $10 par Retained Eamings Total Liabilities and Stockholders Equity 262,000 239,000 5 554,500 $50,000 5,000 230,000 176,000 5461,000Explanation / Answer
Breach & Co. Cash flow Statements for the year ended Dec 31,20XX Cash Flow from Operating Activities: Change in Retained Earnings 63000 Income Tax Payable Account Add: Dividend for the Year 13000 To Tax Paid 5000 By Balance B/d 5000 Net Income for the Year 76000 By Tax Expen 2500 Add: Provision for Income Tax 2500 To Balance c/d 2500 Add: Depreciation 37000 7500 7500 Cash Flow before WC Changes 115500 Changes in CA & CL: Equipment Account Add: Increase in CL: To Balance B/d 370000 Account Payable 1000 To Purchases 25000 Add: Decrease in CA: By Balance c/d 395000 Account Recievable 7000 395000 395000 Less: Increase in CA: Inventories 16500 Accumlated Dep Account Less: Increase in CL: To Tax Paid By Balance B/d 158000 By Depreciation 37000 Cash Flows After WC Changes 107000 To Balance c/d 195000 Less: Income Tax Expense 5000 195000 195000 Net Cash Flow from Operating Activities 102000 Cash Flow from Investing Activities Purchase of Equipment -25000 Purchase of Investments 0 Cash Flow from Investing Activities -25000 Cash Flow from Financing Activities Issue of Common Stock 32000 Dividend Paid -13000 Cash Flow from Financing Activities 19000 Net Cash Flow 96000 Opening Cash 74000 Closing Cash 170000 (Tallied with Cash Closing Balance)
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