Question

Problem 13-3A

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The income statement of Whitlock Company is presented here.

WHITLOCK COMPANY
Income Statement
For the Year Ended November 30, 2017
Sales revenue
$7,524,400
Cost of goods sold
    Beginning inventory
$1,816,200
    Purchases
4,438,600
    Goods available for sale
6,254,800
    Ending inventory
1,364,600
Total cost of goods sold
4,890,200
Gross profit
2,634,200
Operating expenses
1,191,900
Net income
$1,442,300

Additional information:

1. Accounts receivable increased $204,700 during the year, and inventory decreased $451,600.
2. Prepaid expenses increased $172,900 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,400 during the year.
4. Accrued expenses payable decreased $103,900 during the year.
5. Operating expenses include depreciation expense of $90,100.

Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2017, for Whitlock Company, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

WHITLOCK COMPANY
Partial Statement of Cash Flows
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For the Year Ended November 30, 2017
For the Month Ended November 30, 2017
November 30, 2017
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Cash at Beginning of Period
Cash at End of Period
Cash Flows from Financing Activities
Cash Flows from Investing Activities
Cash Flows from Operating Activities
Net Cash Provided by Financing Activities
Net Cash Provided by Investing Activities
Net Cash Provided by Operating Activities
Net Cash Used by Financing Activities
Net Cash Used by Investing Activities
Net Cash Used by Operating Activities
Net Decrease in Cash
Net Increase in Cash
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    Net Income
    Depreciation Expense
    Decrease in Inventory
    Increase in Inventory
    Decrease in Accounts Receivable
    Increase in Accounts Receivable
    Decrease in Accrued Expenses Payable
    Increase in Accrued Expenses Payable
    Increase in Prepaid Expenses
    Decrease in Prepaid Expenses
    Decrease in Accounts Payable
    Increase in Accounts Payable
$
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Adjustments to reconcile net income to
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Cash at Beginning of Period
Cash at End of Period
Cash Flows from Financing Activities
Cash Flows from Investing Activities
Cash Flows from Operating Activities
Net Cash Provided by Financing Activities
Net Cash Provided by Investing Activities
Net Cash Provided by Operating Activities
Net Cash Used by Financing Activities
Net Cash Used by Investing Activities
Net Cash Used by Operating Activities
Net Decrease in Cash
Net Increase in Cash
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    Net Income
    Depreciation Expense
    Decrease in Inventory
    Increase in Inventory
    Decrease in Accounts Receivable
    Increase in Accounts Receivable
    Decrease in Accrued Expenses Payable
    Increase in Accrued Expenses Payable
    Increase in Prepaid Expenses
    Decrease in Prepaid Expenses
    Decrease in Accounts Payable
    Increase in Accounts Payable
$
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    Net Income
    Depreciation Expense
    Decrease in Inventory
    Increase in Inventory
    Decrease in Accounts Receivable
    Increase in Accounts Receivable
    Decrease in Accrued Expenses Payable
    Increase in Accrued Expenses Payable
    Increase in Prepaid Expenses
    Decrease in Prepaid Expenses
    Decrease in Accounts Payable
    Increase in Accounts Payable
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Net Income    
Depreciation Expense    
Decrease in Inventory    
Increase in Inventory    
Decrease in Accounts Receivable    
Increase in Accounts Receivable    
Decrease in Accrued Expenses Payable    
Increase in Accrued Expenses Payable    
Increase in Prepaid Expenses    
Decrease in Prepaid Expenses    
Decrease in Accounts Payable    
Increase in Accounts Payable    
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    Net Income
    Depreciation Expense
    Decrease in Inventory
    Increase in Inventory
    Decrease in Accounts Receivable
    Increase in Accounts Receivable
    Decrease in Accrued Expenses Payable
    Increase in Accrued Expenses Payable
    Increase in Prepaid Expenses
    Decrease in Prepaid Expenses
    Decrease in Accounts Payable
    Increase in Accounts Payable
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Net Income    
Depreciation Expense    
Decrease in Inventory    
Increase in Inventory    
Decrease in Accounts Receivable    
Increase in Accounts Receivable    
Decrease in Accrued Expenses Payable    
Increase in Accrued Expenses Payable    
Increase in Prepaid Expenses    
Decrease in Prepaid Expenses    
Decrease in Accounts Payable    
Increase in Accounts Payable    
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Net Income    
Depreciation Expense    
Decrease in Inventory    
Increase in Inventory    
Decrease in Accounts Receivable    
Increase in Accounts Receivable    
Decrease in Accrued Expenses Payable    
Increase in Accrued Expenses Payable    
Increase in Prepaid Expenses    
Decrease in Prepaid Expenses    
Decrease in Accounts Payable    
Increase in Accounts Payable    
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Cash at Beginning of Period    
Cash at End of Period    
Cash Flows from Financing Activities    
Cash Flows from Investing Activities    
Cash Flows from Operating Activities    
Net Cash Provided by Financing Activities    
Net Cash Provided by Investing Activities    
Net Cash Provided by Operating Activities    
Net Cash Used by Financing Activities    
Net Cash Used by Investing Activities    
Net Cash Used by Operating Activities    
Net Decrease in Cash    
Net Increase in Cash    
$
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Answer 1

• All working forms part of the answer
• Indirect Method concept:

No.	Conceptual Notes
1	Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time.
2	Effects of Non - Cash Transaction are adjusted from Net Income.
3	Depreciation Expense, Amortisation expenses are Added back to Net Income in Cash Flow Statement.
4	Decrease in Current Assets OR Increase in Current Liabilities are ADDED to Net Income
5	Increase in Current Assets OR Decrease in Current Liabilities are DEDUCTED from Net Income

• Requirement, as asked

Partial Statement of Cash Flows
For the year ended Nov 30, 2017
Cash flows from Operating Activities
Net Income		$ 1,442,300.00
Adjustments to reconcile Net Income to
Net Cash Provided by Operating activities
Depreciation expense	$          90,100.00
Increase in Accounts receivables	$      (204,700.00)
Decrease in Inventory	$        451,600.00
Increase in prepaid Expenses	$      (172,900.00)
Decrease in Accounts payable	$      (340,400.00)
Decrease in Accrued expenses	$      (103,900.00)	$    (280,200.00)
Net Cash provided by Operating Activities		$ 1,162,100.00