Nathan Herrmann Has Completed the Basic Format to Be Used

question 73

Essay

Nathan Herrmann has completed the basic format to be used in preparing the statement of cash flows (indirect method)for CEO Consultants.

Listed below in random order are line items to be included in the statement of cash flows.
$$\begin{array} { l r } \text { Purchase of equipment } & \$ 220,000 \\\text { Increase in inventory } & 30,000 \\\text { Increase in prepaid rent } & 10,000 \\\text { Payment of dividends } & 40,000 \\\text { Depreciation expense } & 20,000 \\\text { Increase in accounts receivable } & 60,000 \\\text { Increase in accounts payable } & 10,000 \\\text { Loss on sale of land } & 7,000 \\\text { Net income } & 70,000 \\\text { Repayment of notes payable } & 50,000 \\\text { Cash received from the sale of land } & 3,000 \\\text { Issuance of common stock } & 250,000\end{array}$$
Prepare the statement of cash flows for CEO Consultants using the indirect method.

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Definitions:

"Loss"

The result of expenses exceeding revenues or costs outweighing benefits in a financial transaction or operation.

Reference Point

A baseline value or condition used for comparison in various contexts, including economics, decision making, and psychology.

Item Value

The worth or utility that a specific item or product holds for an individual or the market.

Ownership

The state or fact of exclusive rights and control over property, which can be an object, land/real estate, or intellectual property.