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Indirect Method Statement of Cash Flows

The balance sheets for Hafner Company showed the following information. Additional information concerning transactions and events during 2008 are presented below.

Hafner Company
Balance Sheet
December 31
2008 2007
Cash $ 30,900 $ 10,200
Accounts receivable (net) 43,300 20,300
Inventory 35,000 42,000
Long-term investments 0 15,000
Property, plant & equipment 236,500 150,000
Accumulated depreciation (37,700) (25,000)
$308,000 $212,500

Accounts payable $ 17,000 $ 26,500
Accrued liabilities 21,000 17,000
Long-term notes payable 70,000 50,000
Common stock 130,000 90,000
Retained earnings 70,000 29,000
$308,000 $212,500

Additional data:
1. Net income for the year 2008, $76,000.
2. Depreciation on plant assets for the year, $12,700.
3. Sold the long-term investments for $28,000 (assume gain or loss is ordinary).
4. Paid dividends of $35,000.
5. Purchased machinery costing $26,500, paid cash.
6. Purchased machinery and gave a $60,000 long-term note payable.
7. Paid a $40,000 long-term note payable by issuing common stock.

Instructions
Prepare a statement of cash flows using the indirect method for 2008 for Hafner Company.

Solution Preview

Hafner Company
Statement of Cash Flows
For Year Ended December 31, 2008

Net Income $76,000
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation expense $12,700
...

Solution Summary

Indirect Method Statement of Cash Flows

$2.19