PR 132A Statement of cash flowsindirect method and The compa

PR 13-2A Statement of cash flows-indirect method and The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20 is as follows: Dec. 31, 20Y8 Dec.31,20 Assets s 80,000 $ 1000 275,000 300,000 Cash.. Accounts recelvable (net) Inventories... Prepaid expenses 510,000 15,000 4000 10,000 quipment. Accumulated depreciation-equipment 070,000 750,00 (200,000) -6000 $1750000 51,4000 Total assets Liabilities and Stockholders Equity Accounts payable (merchandise creditors) $ 100,000 9000 0 400,000 300,00020000 00,000 Paid-in capital: Excess of issue price over par-common stock.... 610.00 750,000

Solution

Transactions

Debit

Transactions

Credit

Yellow Dog Enterprises Inc. Statement of Cash Flows For The Year Ended December 31,20X8

Cash flows from operating activities:
Net income	$190000
Adjustments to reconcile net income to net cah flow from operating activities :
Depreciation	115000
Changes in current operating assets and liabilities :
Decrease in accounts receivable	25000
Increase in inventory	(110000)
Increase in prepaid expenses	(5000)
Increase in accounts payable	10000
Net cah flow from operating activities		$225000
Cash flows from investing activities :
Cash paid for equipment	$(395000)
Net cash flow used for investing activities		(395000)
Cash flows from financing activies :
Cash received from sale of common stock	$600000
Cash paid for dividends	(50000)
Cash paid to retire mortgage mote payable	(400000)
Net cash flow used for financing activities		150000
Change in cash		$(20000)
Cash at the beginning of the year		100000
Cash at the end of the year		$80000
NOTE :
The disposal of fully depreciated equipment is not included in the cash flow statement because there is no associated cash flow . This makes to eliminate the involvement of $75000 from the equipment and accumulated depreciation of equipment account.