Sharp Screen Films, Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows:

Sharp Screen Films, Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows:
 

	Current Year				Prior Year
Balance sheet at December 31
Cash	$	67,050			$	65,300
Accounts receivable		17,650				24,250
Merchandise inventory		24,250				19,000
Property and equipment		211,750				153,400
Less: Accumulated depreciation		(61,100	)			(46,850	)
	$	259,600			$	215,100
Accounts payable	$	11,200			$	21,600
Wages payable		4,200				4,700
Note payable, long-term		62,100				73,900
Contributed capital		101,400				66,800
Retained earnings		80,700				48,100
	$	259,600			$	215,100
Income statement for current year
Sales	$	204,000
Cost of goods sold		101,000
Depreciation expense		14,250
Other expenses		43,900
Net income	$	44,850

Additional Data:

1. Bought equipment for cash, $58,350.
2. Paid $11,800 on the long-term note payable.
3. Issued new shares of stock for $34,600 cash.
4. Dividends of $12,250 were declared and paid.
5. Other expenses all relate to wages.
6. Accounts payable includes only inventory purchases made on credit.

Required:

1. Prepare the statement of cash flows using the indirect method for the year ended December 31, current year. (List cash outflows as negative amounts.)

Here

Explanation:

1.

Related Cash Flow Section	Balance Sheet at December 31	Current Year				Prior Year			Change
Δ in Cash	Cash	$	67,050			$	65,300		+	1,750		Net increase in cash
O	Accounts receivable		17,650				24,250		−	6,600		Add to net income the decrease in A/R
O	Merchandise inventory		24,250				19,000		+	5,250		Subtract from net income the increase in Inventory
I	Property and equipment		211,750				153,400		+	58,350		Payment in cash for equipment
O	Less: Accumulated depreciation		(61,100	)			(46,850	)	−	14,250		Add to NI because depreciation expense does not affect cash
		$	259,600			$	215,100
O	Accounts payable	$	11,200			$	21,600		−	10,400		Subtract from net income the decrease in Accounts payable
O	Wages payable		4,200				4,700		−	500		Subtract from net income the decrease in Wages payable
F	Note payable, long-term		62,100				73,900		−	11,800		Cash used for repayment of note principal
F	Contributed capital		101,400				66,800		+	34,600		Issuance of stock for cash
O,F	Retained earnings		80,700				48,100		+	32,600		Increased for net income amount of $44,850 Decreased for dividends declared & paid $12,250
		$	259,600			$	215,100

    
Income statement for current year:
 
 

Sales	$	204,000
Cost of goods sold		101,000
Depreciation expense		14,250
Other expenses		43,900
Net income	$	44,850