Question

Harlan Mining Co. has recently decided to go public and has h+A1:F37ired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Harlan Mining Co. for 2022 and 2021 are provided below.
BALANCE SHEETS
		12/31/2022			12/31/2021
Cash		408,000			192,000
Accounts receivable		360,000			216,000
Inventory		384,000			480,000
Property, plant and equipment	608,000			960,000
Less accumulated depreciation	-320,000	288,000		-304,000	656,000
		1,440,000			1,544,000
Accounts payable		176,000			96,000
Income taxes payable		352,000			392,000
Bonds payable		360,000			600,000
Common stock		216,000			216,000
Retained earnings		336,000			240,000
		1,440,000			1,544,000
INCOME STATEMENT
For the Year Ended December 31, 2022
Sales revenue		8,400,000
Cost of sales		7,152,000
Gross profit		1,248,000
Selling expenses	600,000
Administrative expenses	192,000	792,000
Income from operations		456,000
Interest expense		72,000
Income before taxes		384,000
Income taxes		96,000
Net income		288,000
The following additional data were provided:
1. Dividends for the year 2022 were $192,000.
2. During the year, equipment was sold for $240,000. This equipment cost $352,000 originally and had a book value of $288,000 at the time of sale. The loss on sale was incorrectly charged to cost of sales.
3. All depreciation expense is in the selling expense category.
The net cash provided (used) by financing activities was (only provide a positive or negative number)

Answer 1

Statement of Cash Flows
Cash flow Statement for the 2022
Cash flows from operating activities
Net Income		2,88,000
Adjustments to reconcile net income to net cash provided by operations:
Accounts receivable increase (216000-360000)	-1,44,000
Inventory decrease(480000-384000)	96,000
Accounts payable Increase((176000-96000)	80,000
Income tax payable decrease(352000-392000)	-40,000
Loss on sale of equipment (288000-240000)	48,000
Depreciation expense ($320,000 + $64,000 – $304,000)	80,000
		1,20,000
Net cash provided by operating activities		4,08,000
Cash flows from investing activities:
Sale of equipment	2,40,000
Net cash used in investing activities		2,40,000
Cash flows from financing activities:
payment to binds payable (600,000-360,000)	-2,40,000
Cash paid for cash dividends	-1,92,000
Net cash used in financing activities		-4,32,000
Net increase (decrease) in cash	2,16,000
Cash balance at beginning of year	1,92,000
Cash balance at end of year	4,08,000