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Rodriquez Corporation's comparative balance sheets are presented below: RODRIQUEZ CORPORATION ...

Question:

Rodriquez Corporation's comparative balance sheets are presented below:

RODRIQUEZ CORPORATION
Comparative Balance Sheets
December 31
2017 2016
Cash $ 15,200 $ 17,700
Accounts receivable 25,200 22,300
Investments 20,000 16,000
Equipment 60,000 70,000
Accumulated depreciation-equipment (14,000 ) (10,000)
Total $106,400 $116,000
Accounts payable $ 14,600 $ 11,100
Bonds payable 10,000 30,000
Common stock 50,000 45,000
Retained earning 31,800 29,900
Total $106,400 $116,000

Additional information:

1. Net income was $18,300. Dividends declared and paid were $16,400.

2. Equipment which cost $10,000 and had accumulated depreciation of $1,200 was sold for $3,300.

3. No noncash investing and financing activities occurred during 2017.

Prepare a statement of cash flows for 2017 using the indirect method.

Preparation of Cash Flow Statement:

At end of each financial year, all the entities make three financial statements: Income Statement, Balance sheet and Cash flow statement. Cash flow Statement depicts what all the items from which cash has been received during year and what all the items for which cash has been spent. This statement is divided into three parts.

a) Cash flow from Operating activities : Any cash received and paid due to normal operations is considered under this part.

b) Cash Flow from Investing activities: Amount invested and received in non-current assets are mentioned this part.

c) Cash flow from Financing activities: Fund received from owners and borrowers are mentioned in this part.

Answer and Explanation:

Cash Flow Statement for the year ended 31st December 2017

Particulars $ $
Cash flow from Operating Activities
Net profit 18,300
Add:Depreciati...

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Preparing a Cash Flow Statement by the Indirect Method

from Accounting 301: Applied Managerial Accounting

Chapter 15 / Lesson 3
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