On the basis of the following data for Grant Co. for 2011 and the preceding year

Question

On the basis of the following data for Grant Co. for 2011 and the preceding year ended December 31, 2010, prepare a statement of cash flows. Use the indirect method of reporting cash flows from operating activities. Assume that equipment costing $25,000 was purchased for cash and equipment costing $85.000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were net income of $56,000 and cash dividends declared of $18,000.

Explanation / Answer

Cash Flow statement using the Indirect Method:-

Particulars

Amount($)

Cash Flow From OPERATING Activities:-

Net Income

56000

Add:-Depreciation[150000- (158000-65000)]

57000

Add:-Loss on Sale of Land [(85000-65000)

Cash Flow statement using the Indirect Method:-

Particulars

Amount($)

Cash Flow From OPERATING Activities:-

Net Income

56000

Add:-Depreciation[150000- (158000-65000)]

57000

Add:-Loss on Sale of Land [(85000-65000)

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