Qs$)It$ would $be$ very appreciated $if$ someone can explain the steps and calculations going $on$ here $in$ more detail and simpler way.

Note: If the dividend declared amount is not provided, you can

calculate the amount as follows: dividends declared $=$ beginning

retained earnings $+$ net income $-$ ending retained earnings. Here,

$$30,500+$$$37,000-$$$59,000=$$$8,500$

The total cash flow of $$23,500$ is equal to the increase in the cash

account.

The difference between beginning cash and ending cash should be

used as a check figure to ensure that the total cash flow calculation is

correct.

The steps in calculating CFO under the indirect

method can be summarized as follows:

Step $1$: Begin with net income.

Step $2$: Add or subtract changes to balance sheet operating accounts as

$.....$ EXAMPLE: Statement of cash flows using the

indirect method

Use the following balance sheet

and income statement to prepare

a statement of cash flows under

the indirect method. $\backslash$table$[[$Balance Sheets for $20\backslash$times $7$ and $20\backslash$times $6],[,20\backslash$times $7,20$x$6],[$Assets:$],[$Current Assets:$],[$Cash$,$$$33,000,$$$9,500],[$Accounts receivable,$10,000,9,000],[$Inventory$,5,000,7,000],[$Noncurrent assets:$],[$Land$,$$$35,000,$$$40,000],[$Gross plant and equipment,$85,000,60,000],[$Less: Accumulated depreciation,$(16,000),(9,000)],[$Net plant and equipment,$$60,000,$$$51,000],[$Goodwill$,10,000,10,000],[$Total assets,$$162,000,$$$126,500]]$

$\backslash$table$[[$Liabilities:$,,],[$Current Liabilities:,,$],[$Accounts payable,$$9,000,$$$5,000],[$Wages payable,$4,500,8,000],[$Interest payable,$3,500,3,000],[$Taxes payable,$5,000,4,000],[$Dividends payable,$6,000,1,000],[$Total Current Liabilities,$28,000,21,000],[$Noncurrent liabilities:,,$],[$Bonds$,$$$15,000,$$$10,000],[$Deferred tax liability,$20,000,15,000],[$Total liabilities,$$63,000,$$$46,000],[$Stockholder$\text{'}$s equity:,,$],[$Common stock,$$40,000,$$$50,000],[$Retained Earnings,$59,000,30,500],[$Total equity,$$99,000,$$$80,000],[$Total liability and equity,$$162,000,$$$126,500]]$ Operating cash flow $($CFO$)$:

Step $1$: Start with net income of $$37,000.$

Step $2$: Subtract gain from sale of land of $$10,000.$

Step $3$: Add back noncash charges of depreciation of $$7,000.$

Step $4$: Subtract increases in receivables and inventories and add

increases of payables and deferred taxes.

Cash from the sale $of$ land $=$ Decrease $in$ assets $+$

Gain $on$ sale $=$$$5,000+$$$10,000=$$$15,000$

$(source)$

$\frac{P}{\text{\&}}E$ Purchased $=$ ending gross$\frac{P}{\text{\&}}E+$ gross cost $of$

$\frac{P}{\text{\&}}E$ sold $-$ beginning gross$\frac{P}{\text{\&}}E=$ $$85,000+$$$0-$

$$60,000=$$$25,000(use)$

Cash from bond issue $=$ ending bonds payable$+$

bonds repaid $-$ beginning bonds payable $=$

$$15,000-$ $$0+$$$10,000=$$$5,000(source)$

Cash $to$ reacquire stock $=$ beginning common

stock $+$ stock issued $-$ ending common stock $=$

$$50,000+$$$0-$ $$40,000=($$$10,000)(use)$

Cash dividend $=-$ declared dividend $+$ inc. $in$

dividend payable $=-$$$8,500+$$$5,000=$$$3,500$

$(use)$

Cash from bond issue $=$ ending bonds payable$+$

bonds repaid $-$ beginning bonds payable $=$

Cash to reacquire stock $=$ beginning common

stock $+$ stock issued $-$ ending common stock $=$

$$50,000+$$$0-$ $$40,000=($$$10,000)($use$)$

Cash dividend $=-$ declared dividend $+$ inc. in

dividend payable $=-$$$8,500+$$$5,000=$$$3,500$

$($use$)$