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Financial Accounting

Question Description
Statement of cash flows- Indirect method

.The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7 is as follows: (Net cash flow from operating activities $225,000)

Assets Dec.31 20Y8, Dec.31 20Y7

Cash $80,000 $100,000

Accounts receivable (net) $275,000 $300,000

Inventories $510,000 $400,000

Prepaid Expenses $15,000 $10,000

Equipment $1,070,000 $750,000

Accumulated depreciation-equipment $(200,000) $(160,000)

Total assets $1,750,000 $1,400,000

Liabilities and Stockholders Equity

Accounts payable (merchandise creditors) $100,000 $90,000

Mortgage note payable $0 $400,000

Common stock, $10 par $600,000 $200,000

Paid-in capital: Execs of issue price over par- common stock $300,000 $100,000

Retained earnings $750,000 $610,000

Total liabilities and stockholders Equity $1,750,000 $1,400,000

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

A. Net Income, $190,000

B. Depreciation reported on the income statement $115,000

C. Equipment was purchased at a cost of $395,000 and fully depreciated equipment costing $75,000 was discarded, with no salvage realized.

D. The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.

E. 40,000 shares of common stock were issued as $15 for cash

F. Cash dividends declared and paid, $50,000


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

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