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Course name: Summer ACCT2218

Assignment name: Ch 14 ExtraCredit Prob2 Algorithmic (3pts)

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Problem 14-2 (Algorithmic)Statement of Cash FlowsIndirect Method

The comparative balance sheet of Amelia Enterprises, Inc. at December 31, 2013

and 2012, is as follows:

Dec. 31, 2013 Dec. 31, 2012

Assets

Cash $79,150 $97,000

Accounts receivable (net) 121,620 130,760

Merchandiseinventory 173,740 162,070

Prepaid expenses 7,080 4,910

Equipment 353,930 290,370

Accumulateddepreciation-equipment (92,020) (71,210)

Total $643,500 $613,900

Liabilities and Stockholders' Equity

Accounts payable (merchandise creditors) $135,140 $128,310

Mortgage note payable 0 184,170

Question: w rfm11h/Problem 14-02 AlgorithmicProblem 14-02 Algorithmic

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Common stock, $1 par 21,000 13,000

Paid-in capital in excess of par-common stock 309,000 173,000

Retained earnings 178,360 115,420

Total $643,500 $613,900

Additional data obtained from the income statement and from an examination of the

accounts in the ledger for 2013 are as follows:

a. Net income, $161,130.

b. Depreciation reported on the income statement, $44,910.

c. Equipment was purchased at a cost of $87,660, and fully depreciated equipment

costing $24,100 was discarded, with no salvage realized.

d. The mortgage note payable was not due until 2014, but the terms permitted

earlier payment w ithout penalty.

e. 8,000 shares of common stock were issued at $18 for cash.

f. Cash dividends declared and paid, $98,190.

Instructions:

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Prepare a statement of cash flows, using the indirect method of presenting cash f

activities. If needed, use the minus sign to indicate cash outflows, negative amou

Amelia Enterprises, Inc.

Statement of Cash Flows

For the Year Ended December 31, 2013

Cash flows from operating activities:

Net income $ 161

Adjustments to reconcile net income to net cash

flow from operating activi ties:

Depreciation 44

Changes in current operating assets and liabilities:

Decrease in accounts receivable 9

Increase in me rchandise inventory -11

Increase in prepaid expenses -2

Increase in accounts payable 6

Net cash flow from operating activities

Cash flows from investing activities:

Cash pa id for equipment $ -87

Net cash flow used for investing activities

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Cash flows from financing activities:

Cash received from sale of common stock $ 144

Less cash paid for dividends $ -98190

Less cash paid to retire mortgage note payable -184170 -282

Net cash flow used in fi nancing activities

Decrease in cash

Cash at begi nning of the year

Cash at end of the year

Correct

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Calculate the increases and decreases in accounts. Start with net income

and add back all noncash expenses. Add decreases in assets and

increases in liabilities. Subtract decreases in liabilities and increases in

assets. Losses and gains are a result of investing activities. They are

added to or subtracted from net income.

Cash flows from investing activities are the result of transactions affecting

investments in noncurrent asse ts, including fixed assets, intangibles, and

investments.

Cash flows from financing activities are the result of transactions affecting

the debt and equity, including bonds, notes payable, and preferred and

common stock.

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w rfm11h/Problem 14-02 AlgorithmicProblem 14-02 Algorithmic

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