Answer:
<u><em>Cash Flow Statement </em></u>
Cash flow from Operating Activities
Adjustment for Non - Cash items :
loss on the cash sale of equipment $4,375
Adjustment for Working Capital items :
Increase in short-term note payable $5,700
Net Cash from Operating Activities $10,075
Cash flow from Investing Activities
Proceeds from sale of equipment $28,625
Purchase of Equipment ($64,000)
Net Cash from Investing Activities ($35,375)
Cash flow from Financing Activities
Repayment of the long-term notes payable ($58,625)
Issue of Common Stocks $84,000
Dividend Paid ($53,500)
Net Cash from financing Activities ($28,125)
Movement During the Year ($53,425)
Explanation:
The Indirect method reconciles the Operating Profit to the Cash Flow from Operating Activities by adjusting the following items, (1) Non-cash items previously included or deducted from the Operating Profit and (2) Changes in Working Capital items.
