Redbird Company Uses the Indirect Method to Prepare Its Statement

question 56

Essay

Redbird Company uses the indirect method to prepare its statement of cash flows.Using the following information,complete the worksheet for the year ended December 31,2018.
- Net Income for the year ended December 31,2018 was $49,000
- Depreciation expense for 2018 was $12,000
- During 2018,plant assets with a book value of $10,000 (cost $10,000 and accumulated depreciation $0)were sold for $14,000
- Plant assets were acquired for $52,000 cash
- Issued common stock for $28,000
- Issued long-term notes payable for $34,000
- Repaid long-term notes payable for $40,000
- Purchased treasury stock for 3,000
- Paid dividends of $10,000

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Definitions:

Machinery and Equipment

Assets that include heavy machinery and other equipment used in the production or supply of goods and services.

Repairs

Expenditures to maintain the operational status of assets, rather than to improve or extend their life.

Office Equipment

Tangible items such as computers, desks, and chairs used to facilitate operations in a corporate office setting.

Land

A natural resource not man-made, referring to the earth's surface extending downward to the center of the earth and upward to infinity, including permanently attached natural objects.