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

20–25 min.

The 2014 comparative balance sheet and income statement of Kahl Medical Supplies follow:

Kahl Medical Supplies 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

$ 600

(1,800)

2,300 28,800 4,400

$ 34,300

$ (5,500)

2,600

(28,000)

24,100 41,100

$ 34,300

$ 6,000 26,800 89,600 60,400 49,500

$232,300

$ 35,800 28,300 101,000 64,400 2,800

$232,300

$ 6,600 25,000 91,900 89,200 53,900

$266,600

$ 30,300 30,900 73,000 88,500 43,900

$266,600 INCREASE 2014 2013 (DECREASE)

Kahl Medical Supplies 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

$221,300 153,500

$ 67,800

$213,000 8,300

$ 70,500 27,700 4,600 10,300 11,400 29,000 Kahl Medical Supplies had no noncash investing and financing transactions during 2014. During the year, Kahl Medical Supplies 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 Kahl Medical Supplies?AppendixLO1