Question

Statement of Cash Flows (Indirect Method)
Arctic Company's income statement and comparative balance sheets as of December 31 of 2013 and 2012 follow:

ARCTIC COMPANY Income Statement For the Year Ended December 31, 2013
Sales Revenue		$873,600
Cost of Goods Sold	$640,800
Wages Expense	228,000
Advertising Expense	37,200
Depreciation Expense	26,400
Interest Expense	21,600
Gain on Sale of Land	(30,000)	924,000
Net Loss		$(50,400)

ARCTIC COMPANY Balance Sheets
	Dec. 31, 2013	Dec. 31, 2012
Assets
Cash	$48,720	$33,600
Accounts Receivable	60,480	60,000
Inventory	128,400	135,600
Prepaid Advertising	12,000	15,600
Plant Assets	432,000	266,400
Accumulated Depreciation	(93,600)	(67,200)
Total Assets	$588,000	$444,000
Liabilities and Stockholders' Equity
Accounts Payable	$20,400	$37,200
Interest Payable	7,200	-
Bonds Payable	240,000	-
Common Stock	294,000	294,000
Retained Earnings	62,400	112,800
Treasury Stock	(36,000)	-
Total Liabilities and Stockholders' Equity	$588,000	$444,000

During 2013, Arctic sold land for $84,000 cash that had originally cost $54,000. Arctic also purchased equipment for cash, acquired treasury stock for cash, and issued bonds payable for cash. Accounts payable relate to merchandise purchases.

Required
a. Calculate the change in cash that occurred during 2013.
b. Prepare a statement of cash flows using the indirect method.

a. Change in Cash during 2013 $Answer AnswerIncreaseDecrease

b. Use a negative sign with cash outflow answers.

ARTIC COMPANY Statement of Cash Flows For Year Ended December 31, 2013
Cash Flow from Operating Activities
Net Loss		$Answer
Add (deduct) items to convert net income to cash basis
Depreciation		Answer
Gain on Sale of Land		Answer
Accounts Receivable	AnswerIncreaseDecrease	Answer
Inventory	AnswerIncreaseDecrease	Answer
Prepaid Advertising	AnswerIncreaseDecrease	Answer
Accounts Payable	AnswerIncreaseDecrease	Answer
Interest Payable	AnswerIncreaseDecrease	Answer
Cash Flow Provided by Operating Activities		Answer
Cash Flow from Investing Activities
Sale of Land		Answer
Purchase of Plant Assets		Answer
Cash Used by Investing Activities		Answer
Cash Flow from Financing Activities
Issuance of Bonds Payable		Answer
Purchase of Treasury Stock		Answer
Cash Provided by Financing Activities		Answer
Net AnswerIncreaseDecrease in Cash		Answer
Cash at Beginning of Year		Answer
Cash at End of Year		$Answer

Answer 1

Requirement a

Change in cash= Beginning cash balance – Ending cash balance

=$15120 Increase

Requirement b

               

ARTIC COMPANY
Statement of Cash Flows
For Year Ended December 31, 2013
Cash Flow from Operating Activities
Net Loss		$   (50,400.00)
Add (deduct) items to convert net income to cash basis
Depreciation		$    26,400.00
Gain on Sale of Land		$   (30,000.00)
Accounts Receivable	Increase	$        (480.00)
Inventory	Decrease	$      7,200.00
Prepaid Advertising	Decrease	$      3,600.00
Accounts Payable	Decrease	$   (16,800.00)
Interest Payable	Increase	$      7,200.00
Cash Flow Provided by Operating Activities		$   (53,280.00)
Cash Flow from Investing Activities
Sale of Land		$    84,000.00
Purchase of Plant Assets		$(2,19,600.00)
Cash Used by Investing Activities		$(1,35,600.00)
Cash Flow from Financing Activities
Issuance of Bonds Payable		$ 2,40,000.00
Purchase of Treasury Stock		$   (36,000.00)
Cash Provided by Financing Activities		$ 2,04,000.00
Net Increase in Cash		$    15,120.00
Cash at Beginning of Year		$    33,600.00
Cash at End of Year		$    48,720.00

Working note ..

Beginning balance in Plant assets	$ 2,66,400.00
Less: Land sold	$   (54,000.00)
	$ 2,12,400.00
Ending balance in Plant assets	$ 4,32,000.00
Plant asset purchased	$ 2,19,600.00