Nathan Herrmann has completed the basic format to be used in preparing the statement of cash flows (indirect method) for CEO Consultants. Listed below in random order are line items to be included in the statement of cash flows. Purchase of equipment $ 229,000Increase in inventory 35,000Increase in prepaid rent 7,500Payment of dividends 31,000Depreciation expense 13,000Increase in accounts receivable 47,000Increase in accounts payable 15,000Loss on sale of land 12,000Net income 69,000Repayment of notes payable 49,000Cash received from the sale of land 7,500Issuance of common stock 241,000Prepare the statement of cash flows for CEO Consultants using the indirect method.

Ending cash balance is -$41,000.

Explanation:

This can be prepared as follows:

Nathan Herrmann

Cash Flow Statement

for the year ended ...

Details                                                                   $                      $             

Net income                                                      69,000  

Adjustment to reconcile net income    

Depreciation expense                                     13,000  

Loss on sale of land                                         12,000  

(Increase) decrease in current assets

Increase in inventory                                     (35,000)

Increase in prepaid rent                                  (7,500)

Increase in accounts receivable                   (47,000)

Increase (decrease) in current liabilities:  

Increase in accounts payable                          15,000  

Net cash from operating activities                                         19,500

Cash flows from investing activities:  

Cash received from the sale of land                7,500  

Purchase of equipment                               (229,000)

Net cash flows from Investing activities                            (221,500)

Cash flows from financing activities:  

Payment of dividends                                      (31,000)

Repayment of notes payable                         (49,000)

Issuance of common stock                             241,000  

Net cash from financing activities                                          161,000  

Increase / (Decrease) in cash                                                   (41,000)

Beginning cash balance                                                                    -    

Ending cash balance                                                                 (41,000)

answer; i believe the correct answer is (sales promotion;

i would prefer to go with the news article for nate, its recent and updated and stores a lot of information