Question

P11-45. Statement of Cash Flows (Indirect Method).

Artic Company’s income statement and comparative balance sheet follow.

ARTIC COMPANY

Income Statement

For Year Ended December 31, 2019.

Sales……………………………………………………………….. $728,000

Cost of goods sold                            $534,000

Wages expense                                   190,000

Advertising expense                             31,000

Depreciation expense                          22,000

Interest expense                                   18,000

Gain on sale of land                            (25,000)          770,000

Net loss                                                                       $ (42,000)

ARTIC COMPANY

Balance Sheet

                                                                                

                                                         December 31, 2019                   December 31, 2018

Assets

Cash………………………………………                 49,000                                        28,000

Accounts receivable     ………….                 42,000                                        50,000

Inventory ………………………………              107,000                                      113,000  

Prepaid advertising………………..                10,000                                        13,000

Property, plant, equipment…….             360,000                                      222,000

Accumulated depreciation……...             (78,000)                                     (56,000)

Total assts……………………………….            490,000                                      370,000

Liabilities and Stockholders’ Equity.

Accounts payable………………………..             17,000                                     31,000

Interest payable………………………….                6,000                                          -     

Bonds payable…………………………….            200,000                                         -

Common stock…………………………..             245,000                                   245,000

Retained earnings……………………..                52,000                                     94,000

Treasury Sock…………………………….             (30,000)                                          -

Total liabilities and equity………….             490,000                                   370,000

During 2019, Artic sold land for $70,000 cash that had originally cost $45,000. Artic also purchased equipment for cash, acquired treasury stock for cash, and issued bonds payable for cash in 2019. Accounts payable relate to merchandise purchases.

Required.

1. Compute the change in cash that occurred during 2019
2. Prepare a 2019 statement of cash flows using the indirect method.

Answer 1