Cash Flows Statement —Indirect Method
Love Thy Pets Inc., Statement of Cash Flows For the Year Ended, December 31, 2011 Cash flows from operating activities: Net Income Adjustments Adjustments to reconcile net income to net cash provided by operating activities Depreciation Amortization Loss on disposal of store equipment Gain on disposal of office equipment Increase in accounts receivable Decrease in merchandise inventory Increase in prepaid expenses Decrease in accounts payable Increase in accrued expenses payable
$XX,XXX XX,XXX XX,XXX (XX,XXX) (X,XXX) XXX (X,XXX) (XX,XXX) X,XXX
Net cash provided by operating activities Cash flows from investing activities: Purchase of equipment Sale of equipment Purchase of investment Sale of investment
(XX,XXX) XX,XXX (X,XXX) X,XXX
Net cash used by investing activities Cash flows from financing activities: Issuance of common stock Issuance of note or bonds payable Payment of dividends Redemption of bonds Purchase of treasury stock Net cash provided by financing activities Net increase (decrease) in cash Cash at beginning of period Cash at end of period
MJC 2015
$XX,XXX
X,XXX XX,XXX
XX,XXX XX,XXX XX,XXX (X,XXX) (X,XXX) (X,XXX) XX,XXX X,XXX XX,XXX $XX,XXX
1
Cash Flows Statement —Indirect Method
Using a balance sheet with two years of information subtract the oldest year from the current year to determine if there was an increase or a decrease in each account. Also use information from the income statement to determine the amount of annual depreciation and/or amortization. The following is the three sections of the cash flows statement with directions on what to add or subtract from each section: Please note that you will use only the accounts and transactions show on the balance you are using. The below charts provides categories to inform you were to place items. Operating Activities
Additions Yearly (Annual) Depreciation Depreciation
Yearly (Annual) Amortization Yearly (Annual) Depletion
Subtractions Gains in disposal of long-term assets (i.e. Land, Buildings, Equipment, and Investments) Only record the amount of the gain. Increases in current assets (i.e. Accounts Receivables, Inventory, Prepaid expenses) Decreases in current Liabilities (i.e. Accounts Payable, Income Tax Payable, and/or Wages Payable, etc.)
Losses in disposal of long-term assets (i.e. Land, Buildings, equipment, and Investments) Only record the amount of the losses. Decreases in current assets (i.e. Accounts Receivables, Inventory, Prepaid expenses) Increases in current Liabilities (i.e. Accounts Payable, Income Tax Payable, and/or Wages Payable, etc.) Investing Activities
Sale of long-term assets (i.e. Land, Buildings, Equipment, or investments) Record the cash received for the asset only.
Purchases of long-term assets (i.e. Land, Buildings, Equipment, or investments) Record the cash paid for the asset only.
Financing Activities
Sale of Capital Stocks for cash (i.e. Common Stock, Preferred Stock) Sale of Bonds for cash (i.e. Bonds Payable) Issuances of debt for cash (i.e. Notes Payable)
MJC 2015
Purchases of Treasury Stocks Redemption (repayment) of Bonds Payable Retirement (Repayment) of Notes Payable Payment of Cash Dividends
2
