Accounting 25th Edition by Carl Warren, James Reeve, Jonathan Duchac

Exercise 2

Statement of cash flows-indirect method
The comparative balance sheet of Lankau Enterprises Inc. at December 31, 2014 and 2013, is as follows:

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2014 are as follows:
a. Net income, $198,000.
b. Depreciation reported on the income statement, $125,100.
c. Equipment was purchased at a cost of $244,200, and fully depreciated equipment costing $67,200 was discarded, with no salvage realized.
d. The mortgage note payable was not due until 2016, but the terms permitted earlier payment without penalty.
e. 15,000 shares of common stock were issued at $40 for cash.
f. Cash dividends declared and paid, $230,400.
Instructions
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.