Preparing statement of cash flows LO P2, P3.Use the following information of VPI Co to prepare a statement of cash flows for the year ended December 31 using the indirect method. (Amounts to be deducted should be indicated by a minus sign) Cash best prior year-end $40,000Increase in inventory 5.400 Depreciation expense 4,400 Cash received from using stock 8.600 Cash paid for dividende 1,400Gain on Sale of machinery 2,100 Cash received from sale of inventory 9.700 Increase in account payable 1,700 Net Increase 27.000 Decrease in account payable 3.000 VPI CO. Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilities $ 0 rences Cash flows from investing activities $0 Cash flows from financing activities $0

$85,500

Explanation:

VPI CO. Statement of Cash Flows (Indirect Method) For Current Year Ended December 31

Cash flows from operating activities

Net Income $ 27,000

Adjustment to reconcile net income to net cash provided by operating activities:

Income statement items not affecting cash

Depreciation expnese $ 4,400

Gain on sale of machinery $ (2,100)

Changes in current operating assets and liabilities:

Increase in inventory $ (5,400)

Increase in accounts payable$ 1,700

Decrease in accounts receivable$ 3,000

Net cash generated from operating activities $ 28,600(A)

Cash flow from investing activities:

Cash received from sale of Inventory$ 9,700

Net cash generated from investing activities $ 9,700 (B)

Cash flow from financing activities:

Cash received from issuing stock $8,600

Cash paid for dividends$ (1,400)

Net cash generated from financing activities(8,600-1,400)$ 7,200 (C)

Net increase in cash and cash equivalents (A+B+C)$ 45,500

Add:Beginning cash balance$40,000

Ending cash balance $85,500