Chapter 14: Q14-8SE (page 772)

Question: Preparing the statement of cash flows—indirect method Use the Preston Media Corporation data in Short Exercise S14-7 and the results you calculated from the requirements. Prepare Preston Media’s statement of cash flows— indirect method—for the year ended December 31, 2018.

Expert verified

Answer

Net Increase/(Decrease) in cash is $1,100.

Step by step solution

Cash flows from operating activities	Amount	Amount
Net Income		$19,000
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation expense	$11,000
Increase in accounts receivables	($4,500)
Increase in accounts payable	$3,500
Net cash provided by operating activities		$29,000

Winding Road Cellular Statement of cash flows Year ended 31st December, 2018
Cash flows from operating activities
Net Income		$19,000
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation expense	$11,000
Increase in accounts receivables	($4,500)
Increase in accounts payable	$3,500
Net cash provided by operating activities		$29,000

Cash flows from investing activities
Cash purchase of plant assets	($21,000)
Net cash used for investing activities		($21,000)

Cash flows from financing activities
Cash receipt from issuance of common stock	$4,000
Cash payment of dividends	($7,900)
Payment to notes payable	($7,400)
Cash receipt from issuance of note payable	$4,400
Net cash provided by financing activities		($6,900)
Net Increase/(Decrease) in cash		$1,100
Cash balance, December 31, 2017		$3,900
Cash balance, December 31, 2018		$5,000