Cash Flows StatementIndirect Method

Love Thy Pets Inc.,

Statement of Cash Flows
For the Year Ended, December 31, 2011
Cash flows from operating activities:
Net Income
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
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of equipment
Sale of equipment
Purchase of investment
Sale of investment
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

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XX,XXX

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$XX,XXX

Cash Flows StatementIndirect 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

Yearly (Annual) Amortization

Yearly (Annual) Depletion

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.
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

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.)

Purchases of long-term assets (i.e. Land, Buildings,

Equipment, or investments) Record the cash paid
for the asset only.
Purchases of Treasury Stocks
Redemption (repayment) of Bonds Payable
Retirement (Repayment) of Notes Payable
Payment of Cash Dividends