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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Solpoder Corporation has the following comparative financial statements:

Chapter 14, Problem 44P, Solpoder Corporation has the following comparative financial statements: Dividends of 17,100 were , example  1

Chapter 14, Problem 44P, Solpoder Corporation has the following comparative financial statements: Dividends of 17,100 were , example  2

Dividends of $17,100 were paid. No equipment was purchased or retired during the current year.

Required:

Prepare a statement of cash flows using the indirect method.

To determine

Chart the statement of cash flows using the indirect method.

Explanation

Cash Flow Statement:

Cash flow statement is a financial statement prepared to provide information about the sources and uses of cash in a firm. In this statement, the activities increasing cash are referred as cash inflows and the activities that decrease cash are referred as cash outflows. Financing and investing activities are two category of a cash flow statement.

The statement of cash flows for S Company for 20X2 using indirect method is shown below:

S Company
Statement of Cash Flows
For the year ended December 31, 20X2
ParticularsAmount ($) 
Cash flows from operating activities: Amount ($)
Net income63,000 
Add/ Less:  
    Decrease in accounts receivable127,000 
    Increase in inventories2(27,000) 
    Decrease in accounts payable3(39,600) 
    Depreciation expense49,000 
        Net cash from operating activities 32,400
Cash flows from financing activities:
    Sale of common stock16,200 
    Payment of dividends(17,100) 
        Net cash from financing activities (900)
Net increase in cash 31,500

Table (1)

Therefore, there is a net increase in cash of $31,500.

Working Note:

1.

Calculation of difference in accounts receivable:

(DifferenceinAccountsReceivable)=(AmountofAccountsReceivableof20X2AmountofAccountsReceivableof20X1)=($108,000$135,000)=$27,000

2

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