The management team of Wickersham Brothers Inc. is preparing its annual financia

Question

The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized Current Year Prior Year Balance Sheet Assets Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation $ 91,500 $111,000 120,000105,000 90,000 97.500 170,000 90,000 (48,800) (25,000) Total assets $422,700 $378,500 Liabilities Accounts payable Salaries and Wages Payable Notes payable, long-term $15,000 18,000 1,500 75,000 90,000 3,000 Stockholders' Equity Common stock Retained earnings 140,000 120,000 89,700 149,000 Total liabilities and stockholders' equity $422,700 $378,500 Income Statement $400,000 210,000 23,800 100,000 Sales Cost of goods sold Other expenses Net income 66,200 Other information from the company's records includes the following: a. Bought equipment for cash, $80,000 b.Paid $15,000 on long-term note payable. c. Issued new shares of common stock for $20,000 cash. d. Cash dividends of $25,500 were declared and paid to stockholders. e Accounts Payable arose from inventory purchases on credit. f. Income tax expense ($16,550) and interest expense ($4,500) were paid in full at the end of both years and are included in Other Expenses. Required: a. Prepare the statement of cash flows using the indirect method. Include any supplemental disclosures (Enter any deductions and cash outflows as a negative value.) WICKERSHAM BROTHERS Inc

Explanation / Answer

Net Income 66200 Adjustments Depreciation 23800 Changes in current assets Accounts receivable -15000 Inventories 7500 Accounts payable -3000 Salaries and wages payable 1500 Net cash provided operating activities 81000 Cash flow from investing activity Additions to plant -80000 Net cash provided Investing activities -80000 Cash flow from Financing activity Payment of cash dividends -25500 Proceeds from issuance of stock 20000 payment of long term debt -15000 Net cash provided financing activities -20500 Increase in cash and cash equivalent -19500 cash and cash equivalent in beginning of year 111000 cash and cash equivalent at end of year 91500 Supplemental disclosure Interest 4500 Tax 16550

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