Diaz Company Had the Following Comparative Balance Sheet Information at the End

question 11

Essay

Diaz Company had the following comparative balance sheet information at the end of Year 2 and Year 1:
Diaz reported net income for Year 2 of $40,000. No property, plant, & equipment was disposed of during the year. Diaz uses the indirect method to prepare the statement of cash flows.Using the indirect method, calculate Diaz's cash flow from operating activities for Year 2. Diaz Company
Comparative Balance Sheets
$$\begin{array}{l}\begin{array} {| l | l | l | } \hline &2013&2014\\\hline \text {Cash }&\$ 30,000&\$28,000 \\\hline \text {Accounts receivable}&48,000&50,000 \\\hline \text {Inventory }& 158,000&156,000\\\hline \text {Prepaid insurance }&10,000&8,000\\\hline \text {Property, plant and equipment }&70,000&60,000\\\hline \text {Accumulated depreciation }&(14,000)&(10,000)\\\hline \text {Total }&\$302,000&\$292,000\\\hline \text { }&\\\hline \text { Accounts payable } &\$ 14,000& \$ 18,000\\\hline \text { Bonds payable } &90,000&120,000\\\hline \text {Common stock } & 140,000&120,000\\\hline \text { Retained earnings }&58,000&34,000 \\\hline \text { Total } &\$ 302,000&\$ 292,000\\\hline\end{array}\end{array}$$

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