Question

P12-2 Preparing a Statement of Cash Flows (Indirect Method) LO12-1, 12-2, 12-4, 12-6 BG Wholesalers 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: Prior Year Current Year Balance sheet at December 31 $ 39,400 31,600 31,600 40,500 Cash 36,300 Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreeiation 45,000 125,600 (34,000) $212,300 102,700 (27,100) $179,300 $ 31,600 4,000 52,900 74,700 16,100 $40,300 Accounts payable Accrued wages expense Note payable, long-term Contributed capital Retained earnings 3,500 47,500 94,400 26,600 $212,300 $179,300 Income statenent for current year $137,000 87,000 39,500 S 10,500 Sales Cost of goods sold Other expenses Net income Additional Data:

Answer 1

Statement of cash flows

Particulars	$	$
Cash flow from Operating Activities
Net income	10,500
Add: Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	6,900
Changes in current operating assets and liabilities:
Accounts receivable increase	- 4,700
Inventory increase	- 4,500
Accounts payable increase	8,700
Accrued wages expense decrease	- 500
Net cash provided by Operating Activities		16,400
Cash flow from Investing Activities
Purchase of equipment	- 22,900
Net cash used by Investing Activities		- 22,900
Cash flow from Financing Activities
Issue of common stock	19,700
Repayment of note payable	- 5,400
Net cash provided by Financing Activities		14,300
Net increase in Cash and Cash Equivalents(I +II +III)		7,800
Add: Cash in the beginning of the period		31,600
Cash at the end of the period		39,400

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