Question
Statement of Cash FlowsIndirect Method The following statement of cash flows for Shasta Inc. was not correctly prepared. The cash balance at the beginning of
Statement of Cash FlowsIndirect Method The following statement of cash flows for Shasta Inc. was not correctly prepared. The cash balance at the beginning of the year was $240,000. All other amounts are correct, except the cash balance at the end of the year.
| Shasta Inc. | |||||||
| Statement of Cash Flows | |||||||
| For the Year Ended December 31, 20Y9 | |||||||
| Cash flows from operating activities: | |||||||
| Net income | $360,000 | ||||||
| Adjustments to reconcile net income to net cash flow from operating activities: | |||||||
| Depreciation | 100,800 | ||||||
| Gain on sale of investments | 17,280 | ||||||
| Changes in current operating assets and liabilities: | |||||||
| Increase in accounts receivable | 27,360 | ||||||
| Increase in inventories | (36,000) | ||||||
| Increase in accounts payable | (3,600) | ||||||
| Decrease in accrued expenses payable | (2,400) | ||||||
| Net cash flow from operating activities | $463,440 | ||||||
| Cash flows from (used for) investing activities: | |||||||
| Cash from sale of investments | $240,000 | ||||||
| Cash used for purchase of land | (259,200) | ||||||
| Cash used for purchase of equipment | (432,000) | ||||||
| Net cash flow used for investing activities | (415,200) | ||||||
| Cash flows from (used for) financing activities: | |||||||
| Cash received from sale of common stock | $312,000 | ||||||
| Cash paid for dividends | 132,000 | ||||||
| Net cash flow from financing activities | 180,000 | ||||||
| Increase in cash | $47,760 | ||||||
| Cash at the end of the year | 192,240 | ||||||
| Cash at the beginning of the year | $240,000 | ||||||
b. Enter the corrected amounts below. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
| Net cash flow from operating activities | $ |
| Net cash flow used for investing activities | $ |
| Net cash flow provided by financing activities | $ |
c. Prepare a corrected statement of cash flows. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
| SHASTA INC. | ||
| Statement of Cash Flows | ||
| For the Year Ended December 31, 20Y9 | ||
| Cash flows from operating activities: | ||
| Net income | $ | |
| Adjustments to reconcile net income to net cash flow from operating activities: | ||
| Depreciation | ||
| Gain on sale of investments | ||
| Changes in current operating assets and liabilities: | ||
| Increase in accounts receivable | ||
| Increase in inventories | ||
| Increase in accounts payable | ||
| Decrease in accrued expenses payable | ||
| Net cash flow from operating activities | $ | |
| Cash flows from (used for) investing activities: | ||
| Cash from sale of investments | $ | |
| Cash paid for dividends | ||
| Cash paid for purchase of equipment | ||
| Net cash flow from investing activities | ||
| Cash flows from (used for) financing activities: | ||
| Cash from sale of common stock | $ | |
| Cash received from sale of land | ||
| Net cash flow from financing activities | ||
| Increase in cash | $ | |
| Cash at the beginning of the year | ||
| Cash at the end of the year | $ | |
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