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Course name: Summer ACCT2218
Assignment name: Ch 14 ExtraCredit Prob2 Algorithmic (3pts)
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Total Time spent: 36 minutes, 22 seconds
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Problem 14-2 (Algorithmic)
Statement of Cash FlowsIndirect Method
The comparative balance sheet of Amelia Enterprises, Inc. at December 31, 2013
and 2012, is as follows:
Dec. 31, 2013 Dec. 31, 2012
Assets
Cash $79,150 $97,000
Accounts receivable (net) 121,620 130,760
Merchandise inventory 173,740 162,070
Prepaid expenses 7,080 4,910
Equipment 353,930 290,370
Accumulated depreciation-equipment (92,020) (71,210)
Total $643,500 $613,900

Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors) $135,140 $128,310
Mortgage note payable 0 184,170
Question: wrf m11h/Problem 14-02 Algorithmic Problem 14-02 Algorithmic
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Common stock, $1 par 21,000 13,000
Paid-in capital in excess of par-common stock 309,000 173,000
Retained earnings 178,360 115,420
Total $643,500 $613,900
Additional data obtained from the income statement and from an examination of the
accounts in the ledger for 2013 are as follows:
a. Net income, $161,130.
b. Depreciation reported on the income statement, $44,910.
c. Equipment was purchased at a cost of $87,660, and fully depreciated equipment
costing $24,100 was discarded, with no salvage realized.
d. The mortgage note payable was not due until 2014, but the terms permitted
earlier payment without penalty.
e. 8,000 shares of common stock were issued at $18 for cash.
f. Cash dividends declared and paid, $98,190.
Instructions:
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Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating
activities. If needed, use the minus sign to indicate cash outflows, negative amounts or a decrease in cash.
Amelia Enterprises, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2013
Cash fl ows from operati ng acti vi ti es:
Net income $ 161130
Adj ustments to reconci l e net i ncome to net cash
fl ow from operati ng acti vi ti es:
Depreciation 44910
Changes i n current operati ng assets and l i abi l i ti es:
Decrease in accounts receivable 9140
Increase in merchandise inventory -11670
Increase in prepaid expenses -2170
Increase in accounts payable 6830
Net cash fl ow from operati ng acti vi ti es
Cash fl ows from i nvesti ng acti vi ti es:
Cash paid for equipment $
-87660
Net cash fl ow used for i nvesti ng acti vi ti es
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Cash fl ows from fi nanci ng acti vi ti es:
Cash received from sale of common stock $ 144000
Less cash paid for dividends $ -98190
Less cash paid to retire mortgage note payable -184170 -282360
Net cash fl ow used i n fi nanci ng acti vi ti es
Decrease in cash
Cash at begi nni ng of the year
Cash at end of the year

Correct
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Calculate the increases and decreases in accounts. Start with net income
and add back all noncash expenses. Add decreases in assets and
increases in liabilities. Subtract decreases in liabilities and increases in
assets. Losses and gains are a result of investing activities. They are
added to or subtracted from net income.
Cash flows from investing activities are the result of transactions affecting
investments in noncurrent assets, including fixed assets, intangibles, and
investments.
Cash flows from financing activities are the result of transactions affecting
the debt and equity, including bonds, notes payable, and preferred and
common stock.
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wrf m11h/Problem 14-02 Algorithmic Problem 14-02 Algorithmic
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