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Cash Flow Statement Indirect Method Analysis

The document provides the comparative balance sheets for Aragorn Company for years ending 2015 and 2016, showing changes in assets, liabilities, and stockholder's equity. It also lists additional financial data for 2016, including net income, depreciation expenses, patent amortization, construction of a new building, issuance of a mortgage note and stock, and cash dividends declared. This information needs to be used to prepare a statement of cash flows for Aragorn Company for 2016 using the indirect method.

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Piorobi Doydoy
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24 views2 pages

Cash Flow Statement Indirect Method Analysis

The document provides the comparative balance sheets for Aragorn Company for years ending 2015 and 2016, showing changes in assets, liabilities, and stockholder's equity. It also lists additional financial data for 2016, including net income, depreciation expenses, patent amortization, construction of a new building, issuance of a mortgage note and stock, and cash dividends declared. This information needs to be used to prepare a statement of cash flows for Aragorn Company for 2016 using the indirect method.

Uploaded by

Piorobi Doydoy
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Statement of Cash Flows

Indirect Method
Assignment

The comparative balance sheet of Aragorn Company for the year ended December 31, 2016 and 2015, is
as follows:
Dec. 31, 2015 Dec. 2016
ASSETS
Cash P360,920 P443,240
Account receivable (net) 592,200 665,280
Inventories 1,022,560 887,880
Prepaid expenses 25,200 31,640
Land 302,400 302,400
Buildings 1,134,000 1,713,600
Accumulated Depreciation – buildings (414,540) (466,200)
Machinery and equipment 781,200 781,200
Acc. Dep - machinery and equipment (191,520) (214,200)
Patents 112,000 106,960
Total Assets P3,724,420 P4,251,800

LIABILITIES AND STOCKHOLDER’S EQUITY


Accounts payable (merchandise creditors) P927,080 P837,480
Dividends payable 25,200 32,760
Salaries payable 87,080 78,960
Mortgage note payable 0 224,000
Bonds payable 390,000 0
Common stock, P 1 par value 50,400 200,400
Paid in capital in excess of par 126,000 366,000
Retained earnings 2,118,660 2,512,200
Total Liabilities and Stockholder’s Equity P3,724,420 P4,251,800
Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows:

a. Net income, P 524,580.


b. Depreciation expense reported on the income statement: buildings, P 51,660; machinery and
equipment, P 22,680.
c. Patent amortization reported on the income statement, P 5,040.
d. A building was constructed for P 579,600.
e. A mortgage note of P 224,000 was issued for cash.
f. 30,000 shares of common stock were issued at P 13 in exchange for bonds payable.
g. Cash dividends declared, P 131,040.

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