Answer:
Explanation:
The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:
Cash flow from Operating activities - Indirect method
Net income $314,000
Adjustment made:
Add : Depreciation expense $55,000
Add: Amortization of patent $12,000
Less: Gain on sale of building -$15,000
Add: Loss on sale of land $5,000
Add: Decrease in accounts receivable $23,000
Add: Increase in short-term notes payable $8,000
Add: Decrease in inventory $27,000
Less: Decrease in accounts payable -15,000
Total of Adjustments $100,000
Net Cash flow from Operating activities $414,000
Cash flow from Investing activities
Sale of building $85,000
Less: Purchase of equipment -$185,000
Sale of land $40,000
Less: Purchase of delivery van -$33,000
Net Cash flow from Investing activities -$93,000
Cash flow from Financing activities
Proceeds from issuance of common stock $103,000
Less: Payment of cash dividends -$24,000
Less: Payment of mortgage -$75,000
Net Cash flow from Financing activities $4,000
Net Cash flow from Operating activities $414,000
Net Cash flow from Investing activities -$93,000
Net Cash flow from Financing activities $4,000
Net increase (decrease) in cash for the year is $325,000
Add: Cash at beginning of year $205,000
Ending cash balance $530,000
