Question

XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized
Previous Year Current Year Balance Sheet at December 31 Cash Accounts Receivable Inventory Equipment Accumulated Depreciation-Equipment $ 34,480 29,500 28,200 38,200 102,000 (30,400(25,200) 35,400 41,400 124,000 $204,880 $172,700 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings $ 36,400 1,280 39,800 89,800 37,600 27,200 1,500 46,000 72,800 25,200 $204,880 $172,700 Income Statement Sales Revenue Cost of Goods Sold Other Expenses $122,000 71,000 38,600 Net Income $ 12,400 Additional Data
a. Bought equipment for cash, $22,000
b. Paid $6,200 on the long-term note payable
c. Issued new shares of stock for $17,000 cash
d. No dividends were declared or paid
e. Other expenses included depreciation, $5,200; Salaries and wages, $20,200; taxes, $6,200; utilities, $7,000
f. Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.
Required:Prepare the statement of cash flows for the current year ended December 31 using the indirect method.

Answer 1

Answer:

$34,480

Explanation:

Preparation of the statement of cash flows for the current year ended December 31 using the indirect method.

Cash flow from Operating Activities

Net income $12,400

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

Depreciation expense $5,200

Changes in current operating assets and liabilities:

Accounts receivable increase - $7,200

($35,400-$28,200)

Inventory increase -$3,200

($41,400-$38,200)

Accounts payable increase $9,200

($36,400-$27,200)

Accrued wages expense decrease -$220

($1,280-$1,500)

Net cash provided by Operating Activities $16,180

Cash flow from Investing Activities

Purchase of equipment- $22,000

Net cash used by Investing Activities- $22,000

Cash flow from Financing Activities

Issue of common stock $17,000

Repayment of note payable -$6,200

Net cash provided by Financing Activities $10,800

($17,000-$6,200)

Net increase in Cash and Cash Equivalents $4,980

($16,180+$10,800-$22,000)

Add: Cash in the beginning of the period $29,500

Cash at the end of the period $34,480

($29,500+$4,980)

Therefore the statement of cash flows for the current year ended December 31 using the indirect method is $34,480