As the accountant at Herman Industries, you are responsible for preparing the statement ofcash flows. You have decided to prepare the statement using the direct method and havegathered the following data from the accounting records:Payment of long-term debt $217,000Collections on accounts receivable 210,900Acquisition of equipment by issuinglong-term note payable 85,000Interest revenue 14,500Credit sales 392,700Salary expense 103,800Cash payments to purchase plant assets 71,000Cost of goods sold 417,300Collection of interest revenue 13,700Payment of cash dividends 48,500Income tax expense and payments 39,200Proceeds from sale of plant assets,including $6,900 loss 31,800Cash receipt of dividend revenue 19,300Payments of salaries 94,100Depreciation expense 72,400Cash sales 203,900Proceeds from issuance of common stock 300,000Payments for interest expense 60,400Bonds payable converted into common stock 250,000Payments to suppliers 295,400Cash balance: December 31, 20X5 55,500Cash balance: December 31, 20X6 9,500Prepare the statement of cash flows for the year ended December 31, 20X6, using the direct method, and include a schedule of non cash investing and financing activities if necessary.
This is a 15 minute exercise, at least. No one is going to do this for you. Do it yourself.
With the direct method of preparing a statement of cash flow you show gross changes in receipts and payments. WIth indirect method you beging with net income and then list cash provided or used in operating, investing and financing activities. I prefer the indirect method.
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