Question

The following information is available for Stamos Corporation for the year ended December 31, 2020, Beginning cash balance Accounts payable decrease Depreciation expense Accounts receivable increase Inventory increase Net income Cash received for sale of land at book value Cash dividends paid Income taxes payable increase Cash used to purchase building Cash used to purchase treasury stock Cash received from issuing bonds $42,000 3,400 147,000 8,600 11,000 262,600 35,000 11,000 4,600 297,000 26,000 189,000 Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow wit (15,000).) STAMOS CORPORATION Statement of Cash Flows-Indirect Method Cash Flows from Operating Activities Net Income Adjustments to Reconcile net income to

Answer 1

Answer and Explanation:

The preparation of the cash flow statement is presented below:

                                    Stamos corporation

                   Statement of cash flow Indirect method

                     For year ended December 31, 2020

Cash flow from operations activities:

Net Income $262,600

Adjustments to reconcile Net Income:

Depreciation $147,000

Less: Increase in account receivables -$8,600

Less: Increase in inventory -$11,000

Less: Decrease in accounts payable -$3,400

Add: Increase in income tax payable $4,600

Net cash flow from operating activities $391,200

Cash flow from investing activities:

Cash received for sale of land $35,000

Less: Cash used to purchase of building $297,000

Net cash flow from investing activities -$262,000

Cash flow from financing activities:

Less: Cash used to purchase of treasury stock -$26000

Cash received from issuing bonds $189,000

Less: Cash dividends paid -$11,000

Net Cash flow from financing activities $152,000

Net increase in cash $281,200

Cash balance at starting of the year $42,000

Cash balance at the end of year $323,200

The cash inflow shows in the positive sign and the cash outflow shows in negative sign