Chapter 14, Problem 14.2APR

Statement of cash flows—indirect method

The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 and 2015 is as follows:

	Dec 31,2016	Dec. 31,2015
Assets
Cash	$ 146.600	S 179,800
Accounts receivable (net)…………………………..	224,600	242,000
Merchandise inventory…………………………..	321,600	299,200
Prepaid expenses…………………………..	13,400	9,600
Equipment…………………………..	655,000	537,000
Accumulated depreciation—equipment…………………………..	(170,800)	(132,200)
Total assets…………………………..	$ 1,190,400	$1,135,400
Liabilities and Stockholders’ Equity
Accounts payable (merchandise creditors) …………………………..	$ 250,200	S 237,600
Mortgage note payable…………………………..	0	336,000
Common stock, $10 par…………………………..	74,000	24,000
Paid in capital: Excess of issue price over par—common stock…………………………..	470,000	320,000
Retained earnings…………………………..	396,200	217,800
Total liabilities and stockholders’ equity…………………………..	$1,190,400	$1,135,400

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2016 are as follows:

• a. Net income, $332,000
• b. Depreciation reported on the income statement, $83,400
• c. Equipment was purchased at a cost of $162,800 and fully depreciated equipment costing $44,800 was discarded, with no salvage realized.
• d. The mortgage note payable was not due until 2018 but the terms permitted earlier payment without penalty.
• e. 10,000 shares of common stock were issued at $20 for cash.
• f. Cash dividends declared and paid. $153,600

Instructions

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.