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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 balance at prior year-end $ 40,400 Gain on sale of machinery $ 2,100 Increase in inventory 5,400 Cash received from sale of machinery 9,700 Depreciation expense 4,400 Increase in accounts payable 1,700 Cash received from issuing stock 8,400 Net income 27,000 Cash paid for dividends 1,400 Decrease in accounts receivable 3,400

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Answer:

Cash and cash equivalents at the end of the year is $90,100.

Explanation:

VPI Co.

Statement of Cash Flows

Net income                                                                            $27,000

Add: Depreciation expense                                                   $4,400

        Increase in accounts payable                                        $1,700

        Increase in inventory                                                     $5,400

Less: Gain on sale of machinery                                           -$2,100

         Decrease in accounts receivable                               -$3,400

Net cash flows from operating activities                          $33,000...(a)

Proceeds from sale of machinery                                          $9,700

Net cash flows (used in) / from investing activities           $9,700...(b)

Proceeds from issuing stock                                                 $8,400

Dividend paid                                                                         -$1,400

Net cash flows (used in) / from financing activities          $7,000...(c)

Net increase in cash and cash equivalents                      $49,700...(d)=(a)+(b)+(c)

Cash balance at the beginning of the year                         $40,400

Cash and cash equivalents at the end of the year             $90,100

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