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.) SHARP SCREEN FILMS, INC. Statement of Cash Flows For the Year Ended December 31, Current Year Cash flows from operating activities $ Net income 43,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 11,700 Decrease in accounts receivable 6,100 Increase in merchandise inventory (5,450) Decrease in wages payable (700) Decrease in accounts payable 11,650 Net cash provided by operating activities 54,650 Cash flows from investing activities: Cash payments to purchase fixed assets 0 Cash flows from financing activities: Cash payments on long-term note Cash payments for dividends (11,700) Cash receipts from issuing stock Net cash provided by financing activities (11,700) Net increase in cash during the year Cash balance, January 1, current year Cash balance, December 31, current year 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 Balance sheet at December 31 $ 73,250 15,250 23,450 209,250 (57,450) 263,750 $ 63,500 21,350 18,000 160,350 (45,750) $217,450 $ 19,000 Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation Accounts payable Wages payable Note payable, long-term Contributed capital Retained earmings 16,500 2,000 56,300 103,950 85,000 $263,750 2,700 71,000 65,900 58,850 $217,450 Income statement for current year $205,000 123,500 11,700 Sales Cost of goods sold Depreciation expense Other expenses Net income 43,000 26,800 Additional Data: a. Bought equipment for cash, $48,900. b. Paid $14,700 on the long-term note payable. c. Issued new shares of stock for $38,050 cash. d. Dividends of $650 were declared and paid. e. Other expenses all relate to wages. f. Accounts payable includes only inventory purchases made on credit. Cash payments for dividends Cash payments on long-term note Cash payments to purchase fixed assets Cash receipts from issuing stock ASIT receOtS nom Ssulng stOCK Net cash provided by operating activities Cash flows from investing activities: Cash receipts from issuing stock Decrease in accounts payable Decrease in accounts receivable Decrease in merchandise inventory Decrease in wages payable (11,7 SITTeceipis romISSulng StOCK Net cash provided by financina activities. Cash flows from investing activities: Depreciation expense Increase in accounts payable Increase in accounts receivable Increase in merchandise inventory Increase in wages payable USITTeceipis onI ISSUlng SIOCK
