Statement of Cash Flows—Indirect MethodThe comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows: Dec. 31, 20Y8Dec. 31, 20Y7Assets Cash$73,180 $89,960 Accounts receivable (net)112,450 121,280 Inventories160,640 150,320 Prepaid expenses6,540 4,550 Equipment327,220 269,310 Accumulated depreciation-equipment(85,080) (66,050) Total assets$594,950 $569,370 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors)$124,940 $119,000 Mortgage note payable0 170,810 Common stock, $1 par19,000 12,000 Paid-in capital: Excess of issue price over par-common stock280,000 161,000 Retained earnings171,010 106,560 Total liabilities and stockholders’ equity$594,950 $569,370 Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:Net income, $164,990.Depreciation reported on the income statement, $41,380.Equipment was purchased at a cost of $80,260, and fully depreciated equipment costing $22,350 was discarded, with no salvage realized.The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.7,000 shares of common stock were issued at $18 for cash.Cash dividends declared and paid, $100,540.Required:Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.Yellow Dog Enterprises Inc.Statement of Cash FlowsFor the Year Ended December 31, 20Y8Cash flows from operating activities: Cash at the beginning of the yearCash at the end of the year Net incomeAdjustments to reconcile net income to net cash flow from operating activities:Depreciation vChanges in current operating assets and liabilities:Decrease in accounts receivable vIncrease in inventory vIncrease in prepaid expensesIncrease in accounts payable vNet cash flow from operating activitiesCash flows from investing activities:Cash paid for equipment vNet cash flow used for investing activitiesCash flows from financing activities:Cash received from sale of common stock vCash paid for dividendsCash paid to retire mortgage note payable vNet cash flow used for financing activitiesChange in cash v

Cash Flow Statement shows all the cash receipts and payments done in the relevant period. It has 3…

Answered: Prepare a statement of cash flows,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Statement of Cash Flows—Indirect Method

The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows:

	Dec. 31, 20Y8	Dec. 31, 20Y7
Assets
Cash	$73,180		$89,960
Accounts receivable (net)	112,450		121,280
Inventories	160,640		150,320
Prepaid expenses	6,540		4,550
Equipment	327,220		269,310
Accumulated depreciation-equipment	(85,080)		(66,050)
	Total assets	$594,950		$569,370

Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors)	$124,940		$119,000
Mortgage note payable	0		170,810
Common stock, $1 par	19,000		12,000
Paid-in capital: Excess of issue price over par-common stock	280,000		161,000
Retained earnings	171,010		106,560
	Total liabilities and stockholders’ equity	$594,950		$569,370

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:

Net income, $164,990.
Depreciation reported on the income statement, $41,380.
Equipment was purchased at a cost of $80,260, and fully depreciated equipment costing $22,350 was discarded, with no salvage realized.
The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
7,000 shares of common stock were issued at $18 for cash.
Cash dividends declared and paid, $100,540.

Required:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Yellow Dog Enterprises Inc.

Statement of Cash Flows

For the Year Ended December 31, 20Y8

Cash flows from operating activities: