Textbook Problem

Statement of cash flows—indirect method

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

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

1. a. Net income, $250,000.
2. b. Depreciation reported on the income statement, $135,000.
3. c. Equipment was purchased at a cost of $420,000 and fully depreciated equipment costing $90,000 was discarded, with no salvage realized.
4. d. The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
5. e. 30,000 shares of common stock were issued at $20 for cash.
6. f. Cash dividends declared and paid, $45,000.

Instructions

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