In: Accounting
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 | $ 925,710 | $ 997,290 | |||
Accounts receivable (net) | 842,400 | 768,340 | |||
Inventories | 1,277,480 | 1,175,650 | |||
Prepaid expenses | 29,620 | 35,180 | |||
Land | 318,440 | 481,370 | |||
Buildings | 1,471,880 | 907,200 | |||
Accumulated depreciation-buildings | (416,570) | (388,800) | |||
Equipment | 518,400 | 458,230 | |||
Accumulated depreciation-equipment | (142,560) | (160,150) | |||
Total assets | $4,824,800 | $4,274,310 | |||
Liabilities and Stockholders' Equity | |||||
Accounts payable (merchandise creditors) | $ 916,710 | $ 967,370 | |||
Bonds payable | 270,190 | 0 | |||
Common stock, $20 par | 318,000 | 118,000 | |||
Paid-in capital: Excess of issue price over par-common stock | 763,000 | 563,000 | |||
Retained earnings | 2,556,900 | 2,625,940 | |||
Total liabilities and stockholders’ equity | $4,824,800 | $4,274,310 |
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 | 481,370 | |||
Apr. 20 | Realized $151,500 cash from sale | 162,930 | 318,440 |
ACCOUNT Buildings | ACCOUNT NO. | ||||
Balance | |||||
Date | Item | Debit | Credit | Debit | Credit |
20Y2 | |||||
Jan. 1 | Balance | 907,200 | |||
Apr. 20 | Acquired for cash | 564,680 | 1,471,880 |
ACCOUNT Accumulated Depreciation-Buildings | ACCOUNT NO. | ||||
Balance | |||||
Date | Item | Debit | Credit | Debit | Credit |
20Y2 | |||||
Jan. 1 | Balance | 388,800 | |||
Dec. 31 | Depreciation for year | 27,770 | 416,570 |
ACCOUNT Equipment | ACCOUNT NO. | ||||
Balance | |||||
Date | Item | Debit | Credit | Debit | Credit |
20Y2 | |||||
Jan. 1 | Balance | 458,230 | |||
Jan. 26 | Discarded, no salvage | 50,400 | 407,830 | ||
Aug. 11 | Purchased for cash | 110,570 | 518,400 |
ACCOUNT Accumulated Depreciation-Equipment | ACCOUNT NO. | ||||
Balance | |||||
Date | Item | Debit | Credit | Debit | Credit |
20Y2 | |||||
Jan. 1 | Balance | 160,150 | |||
Jan. 26 | Equipment discarded | 50,400 | 109,750 | ||
Dec. 31 | Depreciation for year | 32,810 | 142,560 |
ACCOUNT Bonds Payable | ACCOUNT NO. | ||||
Balance | |||||
Date | Item | Debit | Credit | Debit | Credit |
20Y2 | |||||
May 1 | Issued 20-year bonds | 270,190 | 270,190 |
ACCOUNT Common Stock, $20 par | ACCOUNT NO. | ||||
Balance | |||||
Date | Item | Debit | Credit | Debit | Credit |
20Y2 | |||||
Jan. 1 | Balance | 118,000 | |||
Dec. 7 | Issued 10,000 shares of common stock for $40 per share |
200,000 | 318,000 |
ACCOUNT Paid-in Capital in Excess of Par-Common Stock | ACCOUNT NO. | ||||
Balance | |||||
Date | Item | Debit | Credit | Debit | Credit |
20Y2 | |||||
Jan. 1 | Balance | 563,000 | |||
Dec. 7 | Issued 10,000 shares of common stock for $40 per share |
200,000 | 763,000 |
ACCOUNT Retained Earnings | ACCOUNT NO. | ||||
Balance | |||||
Date | Item | Debit | Credit | Debit | Credit |
20Y2 | |||||
Jan. 1 | Balance | 2,625,940 | |||
Dec. 31 | Net loss | 33,240 | 2,592,700 | ||
Dec. 31 | Cash dividends | 35,800 | 2,556,900 |
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: | ||
Increase in inventories | ||
Decrease in prepaid expenses | ||
Decrease in accounts payable | ||
Net cash flow used for operating activities | $ | |
Cash flows from (used for) investing activities: | ||
Cash from land sold | $ | |
Cash used for acquisition of building | ||
Cash used for purchase of equipment | ||
Net cash flow used for investing activities | ||
Cash flows from (used for) financing activities: | ||
Cash from issuance of bonds payable | $ | |
Cash from issuance of common stock | ||
Cash used for dividends | ||
Net cash flow from financing activities | ||
Decrease in cash | $ | |
Cash at the beginning of the year | ||
Cash at the end of the year |