Exercise 12-5 The following information is available for Pharoah Company for the year ended December 31, 2017. Beginning cash balance $ 48,420 Accounts payable decrease 3,981 Depreciation expense 174,312 Accounts receivable increase 8,823 Inventory increase 11,836 Net income 305,692 Cash received for sale of land at book value 37,660 Cash dividends paid 12,912 Income taxes payable increase 5,057 Cash used to purchase building 310,964 Cash used to purchase treasury stock 27,976 Cash received from issuing bonds 215,200 Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e. g. -15,000 or in parenthesis e. g. (15,000).)

The cash and cash equivalent at the end of the year is $61,224. See the statement of cash flows below.

Explanation:

Pharoah Company

Statement of cash flows

Net income                                                                                   $305,692

Add Depreciation expense                                                              174,312

       Income taxes payable increase                                                5,057

Less Accounts payable decrease                                                    (3,981)

        Accounts receivable increase                                                 (8,823)

        Inventory increase                                                                   (11,836)

Net cash flows from operating activities                                $460,421 --- (a)

Proceed from sale of land                                                               37,660

Purchase of building                                                                     (310,964)

Net cash flows from investing activities                                ($273,304) --(b)

Dividends paid                                                                                 (12,912)

Purchase of treasury stock                                                            (27,976)

Proceed from issuing bonds                                                         215,200

Net cash flows from financing activities                                  $174,312 --(c)

Net decrease in cash and cash equivalents (a+b+c)                  12,804

Cash and cash equivalents, beginning of the year                    48,420

Cash and cash equivalents, end of the year                             $61,224

answer(eu) is the correct answer;

after cutting wages and benefits in order to increase profit .

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