13-4 Bracewell Company reported net income of $193,980 for 2014. Bracewell also reported depreciation expense of $45,100 and a gain of $4,930 on disposal of plant assets. The comparative balance she

13-4

Bracewell Company reported net income of $193,980 for 2014. Bracewell also reported depreciation expense of $45,100 and a gain of $4,930 on disposal of plant assets. The comparative balance sheet shows an increase in accounts receivable of $18,840 for the year, a $20,980 increase in accounts payable, and a $3,500 decrease in prepaid expenses.

Prepare the operating activities section of the statement of cash flows for 2014. Use the indirect method. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

13-7

Exercise 13-7

Meera Corporation’s comparative balance sheets are presented below.

MEERA CORPORATION

Comparative Balance Sheets

December 31

2014 2013

Cash

$14,220 $10,620

Accounts receivable

21,040 23,320

Land

20,020 25,960

Buildings

70,010 70,010

Accumulated depreciation—buildings

(15,090 ) (10,410 )

Total

$110,200 $119,500

Accounts payable

$12,090 $28,430

Common stock

75,400 73,410

Retained earnings

22,710 17,660

Total

$110,200 $119,500

Additional information:

1. Net income was $22,766. Dividends declared and paid were $17,716.

2. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation. The land was sold for $4,890.

(a) Prepare a statement of cash flows for 2014 using the indirect method. (Show amounts that decrease cash flow with either a – sign e.g. -15,000, or in parenthesis e.g. (15,000).)

13-2A

Problem 13-2A

The following account balances relate to the stockholders’ equity accounts of Chipo Corp. at year-end.

2014

2013

Common stock, 10,500 and 10,000 shares,

respectively, for 2014 and 2013 $163,050 $137,580

Preferred stock, 5,000 shares 111,800 111,800

Retained earnings 299,440 246,490

A small stock dividend was declared and issued in 2014. The market value of the shares was $11,120. Cash dividends were $16,000 in both 2014 and 2013. The common stock has no par or stated value.

(a) What was the amount of net income reported by Chipo Corp. in 2014?

Net income

$

(b) Determine the amounts of any cash inflows or outflows related to the common stock and dividend accounts in 2014.

Common stock

$

OutflowInflow

Dividends

$

OutflowInflow

(c) Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows.

Common stock InvestingFinancingOperating

Dividends OperatingInvestingFinancing

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