Current Year Prior Year $ 65,000 78,000 106,500 Cash $ 54,000 Accounts Receivable (net) 85,000 Inventories 90,000 20,000 Land Equipment Accumulated Depreciation 495,000 -215,000 $529,500 370,000 -158,000 $461,000 Accounts Payable (merchandise creditors) Common Stock, $10 par Paid-In Capital in Excess of $ 53,500 $ 55,000 200,000 170,000 62,000 60,000 Par-Common Stock Retained Earnings 214,000 $529,500 176,000 $461,000
The following data pertains to the Milk Company for the fiscal years ended December 31 of the current and previous years. Assume $125,000 in cash was spent on equipment, and $15,000 was spent on land. The stock was sold for cash, and the
Required:
Prepare a statement of cash flow using indirect method.
![Current Year
Prior Year
$ 65,000
78,000
106,500
Cash
$ 54,000
Accounts Receivable (net)
85,000
Inventories
90,000
20,000
Land
Equipment
Accumulated Depreciation
495,000
-215,000
$529,500
370,000
-158,000
$461,000
Accounts Payable (merchandise
creditors)
Common Stock, $10 par
Paid-In Capital in Excess of
$ 53,500
$ 55,000
200,000
170,000
62,000
60,000
Par-Common Stock
Retained Earnings
214,000
$529,500
176,000
$461,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc24347c3-be54-4124-b186-a6907c88fb14%2Ffa1cafee-a343-4863-81f3-6ea9c92f89da%2Fzm66c3l5_processed.png&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Cash flows from operating Activities
Particular | Amount |
Net Income | $56,000 |
Add(subtract) items which affect net income and cash flow differently: | |
Depreciation | $57,000 |
Decrease in Accounts receivable | $7,000 |
Increase in inventory | ($16,500) |
Decrease in Accounts Payable | ($1,500) |
Net cash flow from operating Activities | $102,000 |
Cash flows from investing Activities :
equipment = ($125,000)
Land = ($15,000)
Sale of land = $35,000
Net cash flow from investing Activities = ($105,000)
Cash flows from financing Activities :
Dividend paid = ($18,000)
Issuance of paid in capital =$2,000
Issuance of common stock = $30,000
Net Cash flows from financing Activities =$14,000
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)