Statement of Cash Flows (Indirect Method)

JEM Company’s comparative balance sheets for 2008 and 2009 are provided.

The following additional information is available:

a. Net income for the year 2009 (as reported on the income statement) was $50,000.

b. Dividends of $40,000 were declared and paid.

c. Equipment that cost $8,000 and had a book value of $1,000 was sold during the year for $2,500.
Required:
Based on the information provided, prepare a statement of cash flows for JEM Company for the year ended December 31, 2009. Use the indirect method to report cash flows from operating activities.

Transcribed Image Text:

Cash and cash equivalents Accounts receivable (net) Inventory Equipment JEM Company Comparative Balance Sheets December 31, 2009 and 2008 Accumulated depreciation-equipment Total assets 2009 2008 Assets $ 30,500 64,500 $ 10,000 100,000 55,000 51,000 115,000 30,000 (21,500) (14,000) $228,500 $192,000 Liabilities and Stockholders' Equity Accounts payable $ 52,500 $ 46,000 Long-term notes payable 70,000 50,000 Capital stock 60,000 60,000 Retained earnings 46,000 36,000 Total liabilities and stockholders' equity $228,500 $192,000