Prepare statement of cash flows—indirect method (Learning Objective 3)

20–25 min.

The 2014 comparative balance sheet and income statement of Charleston Medical Supply, Inc., are:

Charleston Medical Supply, Inc.

Comparative Balance Sheet December 31, 2014 and 2013 Current Assets:

Cash and Cash Equivalents Accounts Receivable Inventory Fixed Assets:

Land Equipment, Net Total Assets Current Liabilities:

Accounts Payable Accrued Liabilities Long-Term Liabilities:

Notes Payable Stockholders’ Equity:

Common Stock Retained Earnings Total Liabilities and Stockholders’ Equity

$ 1,800

(2,200)

2,300 27,800 5,400

$ 35,100

$ (6,100)

3,200

(23,000)

24,400 36,600

$ 35,100

$ 5,100 26,500 89,400 60,600 49,200

$230,800

$ 35,800 28,200 100,000 64,100 2,700

$230,800

$ 6,900 24,300 91,700 88,400 54,600

$265,900

$ 29,700 31,400 77,000 88,500 39,300

$265,900 INCREASE 2014 2013 (DECREASE)

Charleston Medical Supply, Inc.

Income Statement Year Ended December 31, 2014 Revenues:

Sales Revenue Interest Revenue Total Revenues Expenses:

Cost of Goods Sold Salaries Expense Depreciation Expense Other Operating Expenses Interest Expense Income Tax Expense Total Expenses Net Income

$214,800 155,500

$ 59,300

$207,000 7,800

$ 70,900 27,200 5,100 11,300 12,400 28,600 Charleston Medical Supply, Inc., had no noncash investing and financing transactions during 2014. During the year, Charleston Medical Supply, Inc., made no sales of land or equipment, no issuance of notes payable, no retirement of stock, and no treasury stock transactions.
Requirements 1. Prepare the 2014 statement of cash flows, formatting operating activities by the indirect method.
2. How will what you learned in this problem help you evaluate an investment in Charleston Medical Supply, Inc.?AppendixLO1