Question

Problem 12-9A

Condensed financial data of Whispering Winds Corp. follow.

Whispering Winds Corp. Comparative Balance Sheets December 31
Assets		2017			2016
Cash		$ 158,368			$ 94,864
Accounts receivable		172,088			74,480
Inventory		220,500			201,586
Prepaid expenses		55,664			50,960
Long-term investments		270,480			213,640
Plant assets		558,600			475,300
Accumulated depreciation		(98,000	)		(101,920	)
Total		$1,337,700			$1,008,910
Liabilities and Stockholders’ Equity
Accounts payable		$ 199,920			$ 131,908
Accrued expenses payable		32,340			41,160
Bonds payable		215,600			286,160
Common stock		431,200			343,000
Retained earnings		458,640			206,682
Total		$1,337,700			$1,008,910

Whispering Winds Corp. Income Statement Data For the Year Ended December 31, 2017
Sales revenue				$761,382
Less:
Cost of goods sold		$265,502
Operating expenses, excluding depreciation		24,324
Depreciation expense		91,140
Income tax expense		53,469
Interest expense		9,271
Loss on disposal of plant assets		14,700		458,406
Net income				$ 302,976

Additional information:

1.		New plant assets costing $196,000 were purchased for cash during the year.
2.		Old plant assets having an original cost of $112,700 and accumulated depreciation of $95,060 were sold for $2,940 cash.
3.		Bonds payable matured and were paid off at face value for cash.
4.		A cash dividend of $51,018 was declared and paid during the year.

Prepare a statement of cash flows 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).)

Answer 1

Statement of Cash Flows
For the Year Ended December 31, 2017
Cash Flows from Operating Activities:
Net income		302976
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	91140
Loss on disposal of plant assets	14700
Increase in Accounts receivable	-97608
Increase in inventory	-18914
Increase in Prepaid expenses	-4704
Increase in accounts payable	68012
Decrease in accrued expenses payable	-8820
		43806
Net cash provided by operating activities		346782
Cash Flows from Investing Activities:
Purchase of Plant Assets	-196000
Sale of Plant Assets	2940
Purchase of Long-term investments	-56840
Net Cash used by Investing Activities		-249900
Cash Flows from Financing Activities
Payment of Cash Dividends	-51018
Redemption of Bonds Payable	-70560
Issuance of Common Stock	88200
Net Cash Used by Financing Activities		-33378
Net Increase in Cash		63504
Cash at Beginning of Period		94864
Cash at End of Period		158368