7 avatar company uses the indirect method to prepare its statement of cash flows usi 4306592

7 avatar company uses the indirect method to prepare its statement of cash flows usi 4306592

7) Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown below, enter the adjustments needed to record the following transactions:

Purchased Treasury Stock for $3,000

Paid dividends of $10,000

Avatar Company

Spreadsheet for Statement of Cash Flows

Year Ended December 31, 2014

Transaction Analysis

Transaction Analysis

Balance

Panel A—Balance Sheet

Dec 31, 2013

Debit

Credit

Dec 31, 2014

Cash

$18,000

$21,000

Accounts Receivable

35,000

4,000

31,000

Inventory

25,000

28,000

53,000

Plant Assets

70,000

52,000

10,000

112,000

Accumulated Depreciation—Plant Assets

(20,000)

12,000

(32,000)

Total Assets

$128,000

$185,000

Accounts Payable

6,000

2,000

4,000

Accrued Liabilities

1,000

1,000

2,000

Long-Term Notes Payable

50,000

40,000

34,000

44,000

Common Stock

2,000

28,000

30,000

Retained Earnings

74,000

49,000

113,000

Treasury Stock

(5,000)

(8,000)

Total Liabilities and Stockholder's Equity

$128,000

 

$185,000

Panel B—Statement of Cash Flows:

Cash Flows From Operating Activities:

Net Income

49,000

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

12,000

Depreciation Expense—Plant Assets

4,000

Gain on Disposal of Plant Assets

4,000

Increase/Decrease in Accounts Receivable

28,000

Increase/Decrease in Inventory

2,000

Increase/Decrease in Accounts Payable

1,000

Increase/Decrease in Accrued Liabilities

Net Cash Provided by Operating Activities

Cash Flows from Investing Activities:

Cash Payment for Acquisition of Plant Assets

52,000

Cash Receipt From Disposal of Plant Assets

14,000

Net Cash Used for Investing Activities

Cash Flows from Financing Activities:

Cash Receipt From Issuance of Notes Payable

34,000

Cash Payment of Notes Payable

40,000

Cash Receipt from Issuance of Common Stock

28,000

Cash Payment for Purchase of Treasury Stock

Cash Payment of Dividends

Net Cash Provided by Financing Activities

Net Increase (Decrease) in Cash

Total

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