Preparing and interpreting a statement of cash flows using a T-account work sheet. Financial statement data for Dickerson Manufacturing Company for the current year appear in Exhibit 4.26.

Additional information includes the following:

(1) Net income for the year was $568,000: dividends declared and paid were

$60,000.

(2) Depreciation expense for the year was $510,000 on buildings and machinery.

(3) The firm sold for S25.()()() machinery originally costing $150,000 with accumulated depreciation of $ 1 20,000.

a. Prepare a statement of cash flows for Dickerson Manufacturing Company for the year using the indirect method to compute cash How from operations. .Support the statement with a T-account work sheet.

b. Comment on the pattern of cash flows from operating, investing, and financing activities.

Transcribed Image Text:

DICKERSON MANUFACTURING COMPANY Comporative Balance Sheet EXHIBIT 4.26 (Problem 28) ASSETS Current Assets Cash Accounts Receivable. Inventory ... Total Current Assets Noncurrent Assets Land: Buildings and Machinery Less Accumulated Depreciation Total Noncurrent Assets Total Assets LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable Taxes Payable Other Short-term Payables Total Current Liabilities Noncurrent Liabilities Bonds Payable Total Liabilities Shareholders' Equity January 1 December 31 $ 358,000 946,000 1,004,000 $2,308,000 $ 324,000 1,052,000 1,208,000 $2,584,000 $ 594,000 8.678,000 (3,974,000) $ 630,000 9,546,000 (4,364,000) $5,298,000 $5,812,000 $7,606.000 $8,396,000 $ 412,000 274,000 588,000 $ 558,000 290,000 726,000 $1,274,000 $1,574,000 1,984,000 1,934,000 $3.258,000 $3,508,000 Common Stock. $1,672,000 $1,704,000 Retained Earnings. 2,676,000 3,184,000 Total Shareholders' Equity $4,348,000 $4,888,000 Total Liabilities and Shareholders' Equity. $7,606,000 $8,396,000