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1. Depreciation expense was $17,500. 2. Dividends declared and paid were $20,000. 3. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had accumulated depreciation of $9,500 at the time of sale. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

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jepessoa

Answer:

the question is incomplete since the net income is missing, so I looked for a similar question and found the attached images.

Statement of Cash flows

For the Year ended December 31, 2017

Cash flow from operating activities

Net income                                                                $32,000

Adjustments to net income:

  • Depreciation expense $17,500
  • Increase in accounts payable $4,000
  • Increase in accounts receivable ($6,000)
  • Increase in inventory ($8,000)
  • Decrease in taxes payable ($1,000)                 $6,500

Cash flow from operating activities                         $38,500

Cash flow from investing activities

Sale of equipment                                                      $8,500

Cash flow from financing activities

Issuance of common stocks                                     $4,000

Dividends paid                                                       ($20,000)

Decrease in bonds payable                                   ($16,000)

Cash flow from financing activities                       ($32,000)

Net increase in cash position                                 $15,000

Beginning cash balance                                         $20,000

Ending cash balance                                              $35,000

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