Statement of cash flows-indirect method
List the errors you find in the following statement of cash flows. The cash balance at the beginning of the year was $240,000. All other amounts are correct, except the cash balance at the end of the year.
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Shasta Inc.
Statement of Cash Flows
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For the Year Ended December 31, 2016
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Cash flows from operating activities:
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Net income
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$360,000
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Adjustments to reconcile net income to net
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cash flow from operating activities:
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| Depreciation |
100,800 |
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Gain on sale of investments
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17,280
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Changes in current operating assets and liabilities:
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Increase in accounts receivable
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27,360
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Increase in inventories
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(36,000)
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Increase in accounts payable
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(3,600)
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Decrease in accrued expenses payable
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(2,400)
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Net cash flow from operating activities
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$ 463,440
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Cash flows from investing activities:
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Cash received from sale of investments
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$240,000
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Less: Cash paid for purchase of land
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$259,200
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Cash paid for purchase of equipment
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432,000
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691,200
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Net cash flow used for investing activities
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(415,200)
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Cash flows from financing activities:
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Cash received from sale of common stock
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$312,000
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Cash paid for dividends
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132,000
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Net cash flow from financing
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180,000
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Increase in cash
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$ 47,760
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Cash at the end of the year
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192,240
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Cash at the beginning of the year
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$240,000
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