Statement of Cash Flows—Indirect Method
The following information was taken from the records of Glassett Produce Company for the year ended June 30, 2008.
|
Borrowed on long term notes |
$15,000 |
|
Issued capital stock |
45,000 |
|
Purchased equipment |
18,000 |
|
Net income |
32,000 |
|
Purchased treasury stock |
5,000 |
|
Paid dividends |
29,000 |
|
Depreciation expense |
21,000 |
|
Retired bonds payable |
65,000 |
|
Patent amortization |
3,000 |
|
Sold long term investment (at cost) |
7,200 |
|
Increase in cash |
13,300 |
|
Decrease in inventories |
6,300 |
|
Increase in accounts receivable |
9,200 |
|
Increase in accounts payable |
10,000 |
|
Cash balance, July 1, 2007 |
22,000 |
Instructions:
1. From the information given, prepare a statement of cash flows using the indirect method.
2. Briefly explain what an interested party would learn from studying the cash flow statement for Glassett Produce Company.