Below are comparative balance sheet data for the Argo Compan

Below are comparative balance sheet data for the Argo Company. As of December 31, 2002 2001 Assets Cash Trading Securities Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation S15,000 4,000 25,000 40,000 35,000 280,000 (100,000) $312,000 $284,000 22,000 45,000 50,000 300,000 (120,000) Total assets Liabilities and Stockholders\' Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $10 par Paid-in capital in excess of par Retained earnings $50,000 $45,000 22,000 42,000 100,000 25,000 50,000 $312,000 $ 284,000 22,000 40,000 100,000 25,000 75,000 Total liabilities and stockholders\' equit Trading securities are considered cash equivalents for this problem. Cash dividends of $20,000 were paid in 2002. There were no other changes to retained earnings for 2002 other than net income. Required: Prepare a statement of cash flows for the year ended 2002, using the indirect method

Solution

Statement of Cash Flows For the Year Ended December 31, 2012 Cash Flows from Operating Activities: Net income 45000 Adjustments to reconcile net income to Net cash provided by operating activities Depreciation expense 20000 Increase in Accounts receivable -5000 Increase in inventory -15000 Increase in accounts payable 5000 5000 Net cash provided by operating activities 50000 Cash Flows from Investing Activities: Purchase of Property,Plant and Equipment -20000 Net Cash used by Investing Activities -20000 Cash Flows from Financing Activities Payment of Cash Dividends -20000 Repayment of Long term mote payable -2000 Net Cash Used by Financing Activities -22000 Net Increase in Cash and Cash equivalents 8000 Cash and Cash equivalents at Beginning of Period 29000 Cash and Cash equivalents at End of Period 37000