Answer and Explanation:
The preparation of the cash flow statement using the indirect method is as follows:
Cash flow from operating activities
Net income $44,450
Add: depreciation expense $14,450
Add: decrease in account receivable ($18,150 - $24,750) $6,600
Less: Increase in merchandise inventory ($24,750 - $19,200) $5,550
LesS: decrease in accounts payable ($11,800 - $21,900) $10,100
Less Decrease in wages payable ($4,500 - $5,100) -$600
Net cash provided from operating activities $49,250
Cash flow from investing activities
Equipment purchased -$59,650
Cash flow used by investing activities -$59,650
Cash flow from financing activities
Cash payment made for long term note payable -$12,100
Issuance of the new shares $35,000
Dividend paid -$11,450
Cash flow from financing activities $11,450
Net increase in cash $1,050
Add: opening cash balance $65,500
Closing cash balance $66,550
