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

20–25 min.

Data from the comparative balance sheet of Marsing Company at March 31, 2014, follow:

Current Assets:

Cash and Cash Equivalents .................................................................

Accounts Receivable ...........................................................................

Inventory.............................................................................................

Current Liabilities:

Accounts Payable................................................................................

Accrued Liabilities...............................................................................

Income Tax Payable ............................................................................

$ 5,600 21,600 52,800

$28,300 16,300 4,800

$15,300 14,400 54,500

$31,700 14,200 8,600 March 31 2014 2013 Marsing Company’s transactions during the year ended March 31, 2014, included:

$42,000 29,400 60,000 Payment of cash dividend ........

Purchase of equipment for cash .............

Issuance of long-term note payable in exchange for cash ...............................

$18,300 99,200 76,400 15,000 Depreciation Expense...............

Purchase of building for cash .................

Net Income ..............................

Issuance of common stock ....................

Requirements 1. Prepare Marsing Company’s statement of cash flows for the year ended March 31, 2014, using the indirect method to report cash flows from operating activities.

2. Evaluate Marsing Company’s cash flows for the year. Mention all three categories of cash flows and give the reason for your evaluation.

AppendixLO1