Additional Information: Net income for 2012 was $30,000. No equipment was disposed of during 2012. Required: Prepare a Cash Flow Statement using the indirect method. Barton Company uses the indirect method of preparing the Statement of Cash Flows and reports the following comparative balance sheet information. As customary, the most recent data is in the first column. Additional Information: Net income for 2012 was $30,000. No equipment was disposed of during 2012. Required: Prepare a Cash Flow Statement using the indirect method. Solution Answer : In the books of Barton Company: Cash Flow Statement ( Indirect Method) All calculations are made according to the difference in balances .

1. Additional Information:
Net income for 2012 was $30,000.
No equipment was disposed of during 2012.
Required:
Prepare a Cash Flow Statement using the indirect method.
Barton Company uses the indirect method of preparing the Statement of Cash Flows and reports
the following comparative balance sheet information. As customary, the most recent data is in
the first column. Additional Information: Net income for 2012 was $30,000. No equipment was
disposed of during 2012. Required: Prepare a Cash Flow Statement using the indirect method.
Solution
Answer :
In the books of Barton Company:
Cash Flow Statement ( Indirect Method)
All calculations are made according to the difference in balances
Particulars
Amount
($)
Amount
($)
Cash From Operating Activities:
Net Income 30,000
Adjustments to reconcile net income to net cash flow from operating
activities
(+) Depriciation Expense 15,000
(-) Increase in Retained Earnings (25,000)
(+) Decrease in Current Asset ( Stock) 20,000
(-) Decrease in Cureent Liabilty ( Payable) (23,000)
Net cash From Operating Actvities....... 17,000
Cash From Investing Activities:

2. Sale of Equipment.... Nil
(-) Purchase Of equipment (50,000)
Net cash from Investing Activities....... (50,000)
Cash From Financing Activities:
Issue of Share Capital 10,000
(-) Bonds Payable (7,000)
Net cash From Financing Activities..... 3,000
Cash at the beginning of the period 80,000
Cash at the end of the period 70,000
Net cash decrease (30,000)