1. Presented on the next page is the financial statement of Weller Company.

Assets 2016 2015

Cash 35,000 20000
Accounts receivable 33000 14000
Merchandise inventory 27000 20000
Property, Plant, and equipment 60000 78000
Accumulated depreciation (29000) (24000)
Total 126000 108,000

Liabilities and Stockholder’s Equity 2016 2015

Accounts Payable 29000 15000
Income taxes Payable 7000 8000
Bonds payable 27000 33000
Common stock 18000 14000
Retained Earnings 45000 38000
Total 126000 108000

Additional data:
 Net income is TK32000
 Dividends declared and paid were TK25000
 During the year equipment was sold for TK8500.This equipment cost TK18000 originally
and had a book value of Tk8500 at the time of sale.
 All depreciations expenses Tk14500 is in the operating expenses section.
 Redemption of bond is Tk. 6000.

Instruction:
Prepare a statement of cash flows using the indirect method for 2016

Solution:
 Weller Company

statement of cash flow (Indirect method)

For the year ended 2016

Net Income 32000
Cashflow from operating activities
Adjustments to reconcile
net Income to net cash provided by operating activities
Depreciation expense 14500
Increase in A/R (33000-14000) (19000)
Increase in inventory (27000-20000) (7000)
Increase in A/P(29000-15000) 14000
Decrease in income tax payable (8000-7000) (1000)
1500
Net Cash Provided by operating activities 33500
Cash flows from investing activities
Sale of equipment 8500
Net Cash Provided by investing activities 42000
Cash flows from financing activities
Issuance of common stock(18000-14000) 4000
Payment of dividend (25000)
Redemption of bond (6000)
(27000)
Net increase in cash 15000
Add:Cash at the beginning of the period 20000
Cash at the end of the period 35000
Cost- dep=BV

10,000-1000=9000

SP 8000 LOSS 1000

SP 10,000 PROFIT 1000

Sp 8500

Bv 8500