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Direct Indirect

This document provides financial data for a company in 2000 and 1999 to construct a statement of cash flows using the direct and indirect methods. It includes balance sheet and income statement accounts for both years. The company paid dividends of $2,500 in 2000 and $46,000 in cash to acquire new fixed assets, with accounts payable only used for inventory and no debt retirement. The summary constructs both a direct and indirect statement of cash flows using the provided data.

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Rojane Maagad II
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213 views3 pages

Direct Indirect

This document provides financial data for a company in 2000 and 1999 to construct a statement of cash flows using the direct and indirect methods. It includes balance sheet and income statement accounts for both years. The company paid dividends of $2,500 in 2000 and $46,000 in cash to acquire new fixed assets, with accounts payable only used for inventory and no debt retirement. The summary constructs both a direct and indirect statement of cash flows using the provided data.

Uploaded by

Rojane Maagad II
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Use the following data to construct a statement of cash flows using the

direct and indirect methods

2000 1999
Cash $4,000 $14,000 -10,000
Accounts receivable 25,000 32,500 -7,000
Prepaid insurance 5,000 7,000 -2,000
Inventory 37,000 34,000 3,000
Fixed assets 316,000 270,000 46,000
Accumulated Depreciation -45,000 -30,000 -15,000
Total assets 342,000 327,500 14,500
Accounts payable $18,000 $16,000 $2,000
Wages payable 4,000 7,000 -3,000
Note payable 173,000 160,000 13,000
Capital stock 88,000 84,000 4,000
Retained earnings 59,000 60,500 -1,500
Total Liabilities & Equity 342,000 327,500 14,500

2000
Sales $200,000
Cost of goods sold -123,000
Depreciation expense -15,000
Insurance expense -11,000
Wage Expense -50,000
Net Income 1,000

During 2000 declared and paid dividends of $2,500 During 2000,


ABC paid $46,000 in cash to acquire new fixed assets. The
accounts payable was used only for inventory. No debt was
retired during 2000.

1. Make a Direct Statement of Cash flow.


2. Make an Indirect Statement of
Cash flow.
Statement of Cash Flow (Direct Method)
1.Accounts receivable and Sales 4. Wages Payable and Wage Exp.
Beginning Balance (2019(. A/R) 32,500 Beginning Balance (2019)
Add: Sales on- account this year 200,000 Add: Wage Expense (2020)
Less:Collection from customer -207,500 Less: Payment for wages
Ending Balance (2020), A/R 25,000 Ending Balance (2020),W/P

2. Ineventory and A/P Indirect Method


Beginning Ineventory (2019) 34,000 Cashflow from operating Activities
Add: Purchases 126,000 Net income:
Less: Cost of Good Sold -123,000 Depriciation Expense
Ending Inventory (2020) 37,000 Decrease in A/R
Decrease in prepaid insurance
Beginning A/P (2019) 16,000 Increase in inventory
Add: Purchases on Account 126,000 Increase in A/P
Less: Cash Paid for inventory -124,000 Decrease inin Wages Payable
Ending Balance A/P (20200 18,000

3. Prepaid insurance Exp. Investing Activities


Beginning balance(2019), Prep.Ins. 7,000 Fixed Asset
Add: Cash Paid for insurance 9,000
Less: Insurance Expense (2020) (11,0000 Cashflow from Financing Activities
End : Balance (2020), Prep.Ins 5,000 Dividends
Note payable
Capital Stock

Increase /(Decrease in cash)

Cash,Beginning of the Year


Cash, End of the Year
7,000
50,000
-53,000
4,000

1,000
15,000
7,500
2,000
-3,000
2,000
-3,000
21,500

-46,000

-2,000
13,000
4,000

-10,000

14,000
$4,000

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