1 P12-1 (Algo) Preparing a Statement of Cash Flows (Indirect Method) LO12-1, 12-2, 12-4, 12-6 7 points Sharp Screen Films, Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: Current Year Prior Year $ 66,950 18,250 $ 65,900 25,050 eBook References Balance sheet at December 31 Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation Accounts payable Wages payable Note payable, long-term Common stock and additional paid-in capital Retained earnings Income statement for current year Sales Cost of goods sold. Depreciation expense Other expenses Net income 25,050 212,450 (61,700) $261,000 $ 12,100 4,600 62,400 19,400 152,700 (47,150) $215,900 $ 22,200 5,100 75,000 102,100 67,100 79,800 46,500 $261,000 $215,900 $207,000 104,000 14,550 44,200 $ 44,250 Additional Data: a. Bought equipment for cash, $59,750. b. Paid $12,600 on the long-term note payable. c. Issued new shares of stock for $35,000 cash. d. Dividends of $10,950 were declared and paid. e. Other expenses all relate to wages. f. Accounts payable includes only inventory purchases made on credit. Required: 1. Prepare the statement of cash flows using the indirect method for the year ended December 31, current year. (List cash outflows as negative amounts.) 1. Prepare the statement of cash flows using the indirect method for the year ended December 31, current year. (List cash outflows as negative amounts.) SHARP SCREEN FILMS, INC. Statement of Cash Flows For the Year Ended December 31, Current Year Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense Decrease in accounts receivable Increase in merchandise inventory Decrease in accounts payable Decrease in wages payable Net cash provided by operating activities Cash flows from investing activities: Cash payments to purchase property and equipment Net cash provided by investing activities Cash flows from financing activities: Cash payments on long-term note Cash receipts from issuing stock Cash payments for dividends Net cash provided by financing activities Net increase in cash during the year Cash balance, January 1, current year Cash balance, December 31, current year $ 14,550 $ 44,250 14,550 58,800 0 $ 0