Preparing a Simple Statement of Cash Flows Using the Indirect

Preparing a Simple Statement of Cash Flows Using the Indirect Method

Avalos Corporation is preparing its annual financial statements at December 31, 2011. Listed here are the items on its statement of cash flows presented in alphabetical order. Parentheses indicate that a listed amount should be subtracted on the cash flow statement. The beginning balance in cash was

Cash borrowed on three-year note                              $30,000

Decrease in accounts payable                                     (3,000)

Decrease in inventory                                                  1,000

Increase in accounts receivable                                     (9,000)

Land purchased                                                          (36,000)

Net income                                                                   25,000

New delivery truck purchased for cash                       (7,000)

Stock issued for cash                                                    24,000

Required:

Prepare the 2011 statement of cash flows for Avalos Corporation. The section reporting cash flows from operating activities should be prepared using the indirect method discussed in the chapter.


Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Accounts Payable
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Accounts Receivable
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Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

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