Problem:
Ron Claims that Carpino's statement of cash flows is an excellent portrayal of a superb frist year with cash increasing $105,000. Lisa replies that it was not a superb first year. Rather she says, the year was an operating failure, that the statement is presented incorrectly, and that $105,000 is not the actual increase in cash. The cash balance as the beginning of the year was $140,000.
| Cash flows from operating activities |
|
| Net income |
|
| Adjustments to reconcile net income to net cash |
|
| provided by operating activities: |
|
| Depreciation expense |
55,000 |
| Net cash provided by operating activities |
|
|
| Cash flows from investing activities |
|
160,000 |
| Purchase of fixures and equipment |
-330,000 |
|
| Merchandise purchased for resale |
-258,000 |
|
| Purchase of investiment |
-75,000 |
|
| Purchace of truck by issuance of note |
-20,000 |
|
| Purchase of treasury stock |
-10,000 |
|
| Net cash used by investing activities |
|
|
| Cash flows from financing activities |
|
|
| Issuance of note for truck |
20,000 |
|
| Payment of cash dividends |
|
|
|
|
|
| Net cash used by financing activities |
|
|
|
|
|
| Net increase in cash |
|
|
| Cash at beginning of period |
|
140,000 |
|
|
|
| Cash at end of period |
|
|
|
|
|
|
|
|
| Noncash investing and financing activities |
|
|
| Depreciation and gain from the sale of investment |
|
135,000 |
Question: Using the data provided, prepare a statement of cash flows in the proper form using the INDIRECT METHOD. The only noncash items in the incomes statement are depreciation and the gain from the sale of the investment.