Question

Below is an alphabetical list of account balances of Crazy Corporation as of December 31, 2019 and 2018 prior to the preparation of closing entries and financial statements.

Account Title	December 31
	2019		2018
	Debit	Credit	Debit	Credit
Accounts Payable		35,500		31,300
Accounts Receivable	58,800		62,000
Accumulated Depreciation, Equipment		64,400		48,300
Allowance for Doubtful Accounts		2,100		2,000
Cash and Cash Equivalents	17,900		14,000
Common Stock, no-par		88,200		64,000
Cost of Goods Sold	185,100		175,845
Depreciation Expense	16,100		15,295
Dividends	62,200		62,200
Equipment	126,500		97,600
Income Tax Expense	29,300		27,835
Insurance Expense	24,600		23,370
Inventories	37,700		52,200
Land	69,100		22,100
Notes Payable		52,000		38,000
Other Operating Expense	50,100		47,595
Prepaid Insurance	1,700		3,900
Retained Earnings		23,000		35,095
Salary Expense	76,900		76,055
Salary Payable		30,000		21,100
Sales Revenue		438,000		416,100
Unearned Revenue		22,800		24,100
Totals	756,000	756,000	679,995	679,995

Question: Prepare a Statement of Cash Flows Using the Indirect Method.

Answer 1

Working:

Income Statement
For the Year Ended December 31, 2019
Sales revenue		438000
Less: Expenses
Cost of goods sold	185100
Depreciation expense	16100
Insurance expense	24600
Other operating expense	50100
Salary expense	76900
Income tax expense	29300	382100
Net income $		55900

Crazy Corporation
Statement of Cash Flows (Indirect)
For the Year Ended December 31, 2019
Cash Flows from Operating Activities
Net income	55900
Adjustments to reconcile net income to net cash provided by operations:
Depreciation expense	16100
Decrease in Accounts Receivable	3300
Decrease in Inventory	14500
Decrease in Prepaid insurance	2200
Increase in Accounts payable	4200
Increase in Salary payable	8900
Decrease in Unearned revenue	-1300
Net cash provided by operating activities		103800
Cash Flows from Investing Activities
Purchase of land	-47000
Purchase of equipment	-28900
Net cash used by investing activities		-75900
Cash Flows from Financing Activities
Issuance of notes payable	14000
Issuance of Common stock	24200
Payment of cash dividends	-62200
Net cash used by financing activities		-24000
Net increase (decrease) in cash		3900
Cash and cash equivalents, December 31, 2018		14000
Cash and cash equivalents, December 31, 2019		17900