Statement of Cash Flows—Indirect Method The following balances are available for

Question

Statement of Cash Flows—Indirect Method

The following balances are available for Chrisman Company:

December 31

Bonds were retired during 2014 at face value, plant and equipment were acquired for cash, and common stock was issued for cash. Depreciation expense for the year was $42,400. Net income was reported at $30,500.

Required:

1. Prepare a statement of cash flows for 2014 using the indirect method in the Operating Activities section. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash.

Chrisman Company

Statement of Cash Flows

For the Year Ended December 31, 2014

Cash Flows from Operating Activities

  

$  

Adjustments to reconcile net income to net cash provided by operating activities:

  

  

  

  

  

  

  

  

  

  

  

  

  

$  

Cash Flows from Investing Activities

  

$  

Cash Flows from Financing Activities

  

$  

  

  

  

  

  

$  

  

$  

Cash balance, December 31, 2013

  

Cash balance, December 31, 2014

$  

December 31

2014 2013 Cash $9,700 $12,100 Accounts receivable 24,300 18,200 Inventory 19,300 32,200 Prepaid rent 10,900 7,300 Land 90,900 90,900 Plant and equipment 485,000 363,800 Accumulated depreciation (78,800) (36,400)     Totals $561,300 $488,100 Accounts payable $14,600 $12,100 Income taxes payable 3,600 6,100 Short-term notes payable 42,400 30,300 Bonds payable 91,000 121,000 Common stock 242,500 181,900 Retained earnings 167,200 136,700     Totals $561,300 $488,100

Explanation / Answer

Statement of Cash Flow Particulars Amount Total Amount Opening cash and cash equivalents             12,100.00 Income                30,500.00 Depreciation                42,400.00 Decrease in income taxes payable                (2,500.00) Increase in AR                (6,100.00) Decrease in inventory                12,900.00 Increase in prepaid rent                (3,600.00) Increase in AP                  2,500.00 Increase in short term notes payable                12,100.00 Cash flow from operating activities             88,200.00 Cash flow from Investing activities Purchase of PPE           (121,200.00) Cash flow from Investing activities         (121,200.00) Cash flow from Financing activities Redemption of Bonds             (30,000.00) Issue of Stock                60,600.00 Cash flow from Financing activities             30,600.00 Closing cash and cash equivalents                9,700.00

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