Statement of Cash Flows please help

Question

I calculated the increases/decreases below

Cash increased 15, 000

A/R increased 19, ooo

Merch Invent increased 7,ooo

PPE decreased 18,000

Accumulated Depr increased 5, ooo

A/P increased 14,000

Income tax payable decreased 1,ooo

bonds payable decreased 6, ooo

common stock decreased 4,ooo

retained earnings increased 7,ooo

depreciation 18,000

net income 32, ooo

Additional data

1. dividends declared and paid 25,000

2. during the yr equipment was sold for 8,500 cash. the equipment cost

18,000 originally and had a book value of 8,500 at time of sale

3. all sales and purchases are on account

the partial answer says CASH FROM OPERATIONS IS 33,500

Answer 1

Something is off with your numbers: 1) the change in the assets doesn't equal the change in the liabilities & equity; 2) the fixed asset activity doesn't tie out. Are you sure the book value wasn't 5,000? (i.e. depreciation of 18 less disposal dep'n of 13 would equal a 5 increase in accumulated dep'n. That would make the book value 18-13 or 5)

Answer 2

I recall answering this before and I think the common stock increased, not decreased $4,000. Your depreciation is also wrong. If the cost of equipment sold was $18,000 and nbv of that equipment was $8,500, then the accum. depn. of equipment sold was $9,500 which makes the depreciation expense $14,500 and not $18,000.

Indirect Method Cash Flow Statement

Cash flows from operating activities

Net income $32,000

Adjustments for:

Depreciation $14,500

Changes in working capital-

Increase in AR ($19,000)

Increase in inventories ($7,000)

Increase in AP $14,000

Decrease in tax payable ($1,000)

Net cash from operating activities $33,500

Cash flows from investing activities

Proceeds from sale of equipment $8,500

Net cash from investing activities $8,500

Cash flows from financing activities

Proceeds from issue of share capital $4,000

Redemption of bonds ($6,000)

Dividends paid ($25,000)

Net cash used in financing activities ($27,000)

Net increase in cash and cash equivalents $15,000