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Q14-8SE

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Horngren'S Financial And Managerial Accounting
Found in: Page 772

Short Answer

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.

Answer

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

See the step by step solution

Step by Step Solution

Step 1: Cash flow from operating activities 

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

Step 2: Statement of cash flows- Indirect method

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

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