Use the Following Information to Prepare a Statement of Cash

question 48

Essay

Use the following information to prepare a statement of cash flows for Stable Equipment Company for the year ended December 31, 2014 if using the indirect method:
Net income for the year 2014 was $5,000. Accounts receivable decreased $2,000, while inventories increased $4,000, and accounts payable decreased $7,000. Depreciation expense included in net income was $8,000.
During the year, a piece of land held for future expansion was sold for its book value of $8,000 and a new service truck was purchased for $14,000.
The company borrowed $18,000 on a two-year note from the bank. Dividends of $6,000 were paid in cash. Preferred stock was issued to retire $7,000 of long-term notes payable.
The beginning cash balance was $22,000 and the ending balance was $32,000.

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Definitions:

Offeree

The person to whom an offer is made, who has the power to accept the offer, thus forming a binding contract.

Reasonable Means

Methods or actions that are considered fair, rational, and appropriate under given circumstances.

General Contract Law

A legal framework governing the formation, execution, and enforcement of agreements between parties.

Invitation To Trade

An announcement published for the purpose of creating interest and attracting a response by many people.