Question

1. Statement of Cash Flows—Indirect Method

   The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows:

   	Dec. 31, 20Y2			Dec. 31, 20Y1
   Assets
   Cash	$ 733,970			$ 791,920
   Accounts receivable (net)	667,910			609,200
   Inventories	1,012,880			932,140
   Prepaid expenses	23,490			27,890
   Land	252,490			381,660
   Buildings	1,167,010			719,290
   Accumulated depreciation-buildings	(330,290)			(308,270)
   Equipment	411,020			363,320
   Accumulated depreciation-equipment	(113,030)			(126,980)
   Total assets	$3,825,450			$3,390,170
   Liabilities and Stockholders' Equity
   Accounts payable (merchandise creditors)	$ 726,840			$ 767,000
   Bonds payable	214,230			0
   Common stock, $20 par	251,000			93,000
   Paid-in capital: Excess of issue price over par-common stock	604,000			446,000
   Retained earnings	2,029,380			2,084,170
   Total liabilities and stockholders’ equity	$3,825,450			$3,390,170

   The noncurrent asset, noncurrent liability, and stockholders' equity accounts for 20Y2 are as follows:

   ACCOUNT Land				ACCOUNT NO.
   				Balance
   Date	Item	Debit	Credit	Debit	Credit
   20Y2
   Jan. 1	Balance			381,660
   Apr. 20	Realized $120,100 cash from sale		129,170	252,490

   ACCOUNT Buildings				ACCOUNT NO.
   				Balance
   Date	Item	Debit	Credit	Debit	Credit
   20Y2
   Jan. 1	Balance			719,290
   Apr. 20	Acquired for cash	447,720		1,167,010

   ACCOUNT Accumulated Depreciation-Buildings				ACCOUNT NO.
   				Balance
   Date	Item	Debit	Credit	Debit	Credit
   20Y2
   Jan. 1	Balance				308,270
   Dec. 31	Depreciation for year		22,020		330,290

   ACCOUNT Equipment				ACCOUNT NO.
   				Balance
   Date	Item	Debit	Credit	Debit	Credit
   20Y2
   Jan. 1	Balance			363,320
   Jan. 26	Discarded, no salvage		40,000	323,320
   Aug. 11	Purchased for cash	87,700		411,020

   ACCOUNT Accumulated Depreciation-Equipment				ACCOUNT NO.
   				Balance
   Date	Item	Debit	Credit	Debit	Credit
   20Y2
   Jan. 1	Balance				126,980
   Jan. 26	Equipment discarded	40,000			86,980
   Dec. 31	Depreciation for year		26,050		113,030

   ACCOUNT Bonds Payable				ACCOUNT NO.
   				Balance
   Date	Item	Debit	Credit	Debit	Credit
   20Y2
   May 1	Issued 15-year bonds		214,230		214,230

   ACCOUNT Common Stock, $20 par				ACCOUNT NO.
   				Balance
   Date	Item	Debit	Credit	Debit	Credit
   20Y2
   Jan. 1	Balance				93,000
   Dec. 7	Issued 7,900 shares of common stock for $40 per share		158,000		251,000

   ACCOUNT Paid-in Capital in Excess of Par-Common Stock				ACCOUNT NO.
   				Balance
   Date	Item	Debit	Credit	Debit	Credit
   20Y2
   Jan. 1	Balance				446,000
   Dec. 7	Issued 7,900 shares of common stock for $40 per share		158,000		604,000

   ACCOUNT Retained Earnings				ACCOUNT NO.
   				Balance
   Date	Item	Debit	Credit	Debit	Credit
   20Y2
   Jan. 1	Balance				2,084,170
   Dec. 31	Net loss	26,380			2,057,790
   Dec. 31	Cash dividends	28,410			2,029,380

   Required:

   Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

   Whitman Co.
   Statement of Cash Flows
   For the Year Ended December 31, 20Y2
   Cash flows from operating activities:
   	$
   Adjustments to reconcile net loss to net cash flow from operating activities:
   Changes in current operating assets and liabilities:
   Net cash flow used for operating activities		$
   Cash flows from (used for) investing activities:
   	$
   Net cash flow used for investing activities
   Cash flows from (used for) financing activities:
   	$
   Net cash flow from financing activities
   		$
   Cash at the beginning of the year
   Cash at the end of the year		$

Answer 1