Statement of Cash Flows—Indirect Method
Comparative balance sheet data for Amber Company follow. In addition, new equipment was purchased for $50,000, payment consisting of $25,000 cash and a long term note for $25,000. The short term note payable was arranged with a supplier to finance inventory purchases on credit. Cash dividends of $10,000 were paid in 2008; all other changes to retained earnings were caused by the net income for 2008, which amounted to $83,500.
|
|
Dec 31, 2008 |
Dec 31, 2007 |
|
Cash and cash equivalents |
$ 41,000 |
$ 28,000 |
|
Accounts receivable |
94,000 |
86,000 |
|
Inventory |
110,000 |
100,000 |
|
Property, plant, and equipment |
550,000 |
500,000 |
|
Accumulated depreciation—property, plant, and equipment |
(277,500) |
(250,000) |
|
Total assets |
$517,500 |
$464,000 |
|
|
Dec 31, 2008 |
Dec 31, 2007 |
|
Short term notes payable |
$ — |
$ 20,000 |
|
Accounts payable |
105,000 |
80,000 |
|
Long term notes payable |
100,000 |
75,000 |
|
Bonds payable |
50,000 |
100,000 |
|
Common stock, $1 par |
20,000 |
20,000 |
|
Additional paid in capital |
155,000 |
155,000 |
|
Retained earnings |
87,500 |
14,000 |
|
Total liabilities and stockholders’ equity |
$517,500 |
$464,000 |
Instructions: Prepare a statement of cash flows for the year ended December 31, 2008, using the indirect method.