Reference no: EM131975648

Problem

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 $ 66,950 $ 65,100 Accounts receivable 17,450 23,950 Merchandise inventory 23,950 18,900 Property and equipment 211,350 153,300 Less: Accumulated depreciation (60,900 ) (46,750 ) $ 258,800 $ 214,500 Accounts payable $ 11,000 $ 21,200 Wages payable 4,000 4,600 Note payable, long-term 62,000 73,700 Contributed capital 101,100 66,700 Retained earnings 80,700 48,300 $ 258,800 $ 214,500 Income statement for current year Sales $ 203,000 Cost of goods sold 100,000 Depreciation expense 14,150 Other expenses 43,800 Net income $ 45,050 Additional Data: Bought equipment for cash, $58,050. Paid $11,700 on the long-term note payable. Issued new shares of stock for $34,400 cash. Dividends of $12,650 were declared and paid. Other expenses all relate to wages. 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.