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Constructing a Company's Statement of Cash Flows

A Company's net income last year was $119,000. Changes in the company's balance sheet accounts for the year appear below:

Increases
(decreases)
Debit balances:
Cash..................................$26,000
Accounts Payable.................$23,000
Accrued liabilities..................$14,000
Taxes Payable.....................$(9,000)
Bonds Payable....................$(50,000)
Deferred taxes.....................$4,000
Common Stock....................$20,000
Retained earnings.................$74,000

The company declared and paid cash dividends of $45,000 last year.

Required:

a. Construct in good form the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.)

b. Construct in good form the investing activities section of the company's statement of cash flows for the year.

c. Construct in good form the financing activities section of the company's statement of cash flows for the year.

Solution Preview

a. Construct in good form the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.)
in $
Retained Earnings 74000
Working Capital Adjustments
Add Increase in Accounts payables 23000
Add Increase in Accrued ...

Solution Summary

Instructions are provided for how to develop a company's cash flow statements.

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