Question

New Line Films, Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: Current Year Prior YearBalance sheet at December 31 Cash $66,650 $65,000 Accounts receivable 16,950 23,750 Merchandise inventory 23,750 18,800 Property and equipment 211,050 153,200 Less: Accumulated depreciation (60,700 ) (46,650 ) $257,700 $214,100 Accounts payable $10,700 $21,000 Wages payable 3,900 4,300 Note payable, long-term 61,900 73,400 Contributed capital 100,800 66,600 Retained earnings 80,400 48,800 $257,700 $214,100 Income statement for current year Sales $202,000 Cost of goods sold 99,000 Depreciation expense 14,050 Other expenses 43,700 Net income $45,250 Additional Data:A - Bought equipment for cash, $57,850.B - Paid $11,500 on the long-term note payable.C - Issued new shares of stock for $34,200 cash.D - Dividends of $13,650 were declared and paid.E - Other expenses all relate to wages.F - Accounts payable includes only inventory purchases made on credit.Required:Prepare the statement of cash flows using the indirect method for the year ended December 31 of the current year.

Answer 1

Answer:

Please see the completed Cash Flow Statement below:

Explanation:

New Line Films, Inc.      

Statement of Cash Flow      

As of December 31, 2019      

     

CASH FLOWS FROM OPERATING ACTIVITIES     $

Net Income      45,250

Adjustments to reconcile net income to      

net cash provided by operating activities:      

Depreciation on Fixed Assets      14,050

(Increase) Decrease in Current Assets:      

Accounts Receivables      6,800  

Merchandise Inventory      (4,950)

Increase (Decrease) in Current Assets:      

Accounts Payable      (10,300)

Wages payable      (400)

NET CASH PROVIDED BY OPERATING ACTIVITIES   50,450  

     

CASH FLOWS FROM INVESTING ACTIVITIES      

Purchase of Property and equipment      (57,850)      

NET CASH USED IN INVESTING ACTIVITIES     (57,850)

     

CASH FLOWS FROM FINANCING ACTIVITIES      

Payment of Note Payable, Long Term      (11,500)

Payment of Cash Dividends      (13,650)

Issuance of Common Stock  34,200  

NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES  9,050  

NET INCREASE (DECREASE) IN CASH     1,650  

Cash Balance, December 31 2016      65,000  

Cash Balance, December 31 2017      66,650