Question

1. Depreciation expense was $17,500. 2. Dividends declared and paid were $20,000. 3. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had accumulated depreciation of $9,500 at the time of sale. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

the question is incomplete since the net income is missing, so I looked for a similar question and found the attached images.

Statement of Cash flows

For the Year ended December 31, 2017

Cash flow from operating activities

Net income $32,000

Adjustments to net income:

• Depreciation expense $17,500
• Increase in accounts payable $4,000
• Increase in accounts receivable ($6,000)
• Increase in inventory ($8,000)
• Decrease in taxes payable ($1,000) $6,500

Cash flow from operating activities $38,500

Cash flow from investing activities

Sale of equipment $8,500

Cash flow from financing activities

Issuance of common stocks $4,000

Dividends paid ($20,000)

Decrease in bonds payable ($16,000)

Cash flow from financing activities ($32,000)

Net increase in cash position $15,000

Beginning cash balance $20,000

Ending cash balance $35,000