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27 June, 06:57

The following information is available for Splish Brothers Corporation for the year ended December 31, 2022.

Beginning cash balance $35,000

Accounts payable decrease 4,000

Depreciation expense 81,000

Accounts receivable increase 8,100

Inventory increase 12,300

Net income 323,000

Cash received for sale of land at book value 35,000

Sales revenue 742,500

Cash dividends paid 11,100

Income tax payable increase 4,700

Cash used to purchase building 146,000

Cash used to purchase treasury stock 32,100

Cash received from issuing bonds 240,000

Prepare a statement of cash flows using the indirect method.

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  1. 27 June, 09:20
    0
    Answer and Explanation:

    The preparation of the cash flow statement using the indirect method is shown below:

    Splish Brothers Corporation

    Cash flow Statement

    For the year ended December 31, 2022

    Cash Flow from Operating Activities

    Net Income $323,000

    Adjustments made

    Add: Depreciation expense $81,000

    Less: Decrease in Account payable - $4,000

    Less: Increase in Account receivable - $8,100

    Add: Increase in Income tax payable $4,700

    Less: Increase in Inventory - $12,300

    Net cash flow provided by the operating activities $61,300

    Cash Flow from Investing Activities

    Add: Cash received for sale of land at book value $35,000

    Less: Cash used to purchase building - $146,000

    Cash flow used by investing activities - $111,000

    Cash Flow from Financing Activities

    Less: Cash used to purchase treasury stock - 32,100

    Add: Cash received from issuing bonds 240,000

    Less: Cash dividend paid - $11,100

    Cash flow provided by financing activities $196,800

    Net increase in cash $147,100

    Add: Beginning cash balance $35,000

    Closing Cash balance $182,100

    The negative sign indicates the outflow of cash and the positive sign indicates the inflow of cash and the same is shown above
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