Indirect Method - Cash flow statement

Sean Seymour Company

Comparative balance sheet - December 31

Assets: 20x2 20x1

Cash $26,000 $13,000

Accounts receivable 18,000 14,000

Inventories 38,000 35,000

Property, Plant & Equip. 70,000 78,000

Accumulated depreciation ( 30,000) ( 24,000)

122,000 116,000

Liabilities & Stockholders’

Equity:

Accounts payable 29,000 33,000

Income taxes payable 15,000 20,000

Bonds payable 20,000 10,000

Common stock 25,000 25,000

Retained earnings 33,000 28,000

122,000 116,000

Sean Seymour Co.

Income statement for the year ended 12/31/x2

Sales $240,000

Less:

COGS 180,000

Selling 28,000

Admin expenses 6,000

Income taxes 7,000

Interest expense 2,000 223,000

Net Income 17,000

 Dividends of $12,000 were declared and paid

 During the year, equipment was sold for $10,000 cash. This equipment

cost $15,000 originally & had accumulated depreciation of $5,000 at the time of

sale.

 All depreciation expense, $11,000, is in the selling expense category

 All sales and purchases are on account

 Additional equipment was purchased for $7,000 cash

Required: Prepare a statement of cash flows using the indirect method

Balance Reconciling Items 20xx Balance Check Balance
Debits 12/31/20xx Debits Credits 12/31/20xx 12/31/20xx
Cash Sean Seymour
Accounts receivable Cash Flow Statement
Inventory 12/31/20xx
Plant Assets
Operating Activities:
Credits
Accumulated Depreciation
Accounts payable
Income taxes payable
Bonds payable
Capital stock
Retained earnings Cash Provided by (Used in) Operating Activities
- - Investing Activities:
Statement of Cash Flow Effects
Operating activities