Asked by Mckenna Grimm on May 13, 2024
Verified
The comparative balance sheets of Barry Company, for Years 1 and 2 ended December 31, appear below in condensed form. Additional data for the current year are as follows:
(a)Net income, $75,800.
(b)Depreciation reported on income statement, $38,000.
(c)Fully depreciated equipment costing $60,000 was scrapped, no salvage, and equipment was purchased for $150,000.
(d)Bonds payable for $75,000 were retired by payment at their face amount.
(e)2,500 shares of common stock were issued at $30 for cash.
(f)Cash dividends declared and paid, $40,000.
(g)Investments of $100,000 were sold for $125,000.Prepare a statement of cash flows using the indirect method.
Statement of Cash Flows
A financial statement that provides an aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.
Operating Activities
Transactions and events that impact the net income of a business, primarily related to its core operations.
Indirect Method
A way of reporting cash flows from operating activities in the cash flow statement, starting with net income and adjusting for non-cash transactions.
- Reconfigure net income in light of alterations in operational assets and liabilities to generate an analysis of cash flows from operational activities.
- Perceive the implications of property, plant, and equipment transactions on the statement of cash flows.
- Formulate the statement of cash flows via the indirect method.
Verified Answer
Learning Objectives
- Reconfigure net income in light of alterations in operational assets and liabilities to generate an analysis of cash flows from operational activities.
- Perceive the implications of property, plant, and equipment transactions on the statement of cash flows.
- Formulate the statement of cash flows via the indirect method.
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