Question

The comparative balance sheet of Barry Company for Years 1 and 2 ended December 31 appears below in condensed form:

	Year 2	Year 1
Assets
Cash	$72,000	$42,500
Accounts receivable (net)	61,000	70,200
Inventories	121,000	105,000
Investments	-	100,000
Equipment	515,000	425,000
Accumulated depreciation—equipment	(153,000)	(175,000)
Total assets	$616,000	$567,700
Liabilities and Stockholders' Equity
Accounts payable	$59,750	$47,250
Bonds payable	-	75,000
Common stock, $20 par	375,000	325,000
Premium on common stock	50,000	25,000
Retained earnings	131,250	95,450
Total liabilities and stockholders' equity	$616,000	$567,700

Additional data for the current year are as follows:

a.		Net income, $75,800.
b.		Depreciation reported on income statement, $38,000.
c.		Fully depreciated equipment costing $60,000 was scrapped, no salvage, and equipment was purchased for $150,000.
d.		Bonds payable for $75,000 were retired by payment at their face amount.
e.		2,500 shares of common stock were issued at $30 for cash.
f.		Cash dividends declared and paid, $40,000.
g.		Investments of $100,000 were sold for $125,000.

Prepare a statement of cash flows using the indirect method. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Barry Company
Statement of Cash Flows
For the Year Ended December 31, Year 2
Cash flows from operating activities:
	$
Adjustments to reconcile net income to cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities		$
Cash flows from investing activities:
	$
Net cash flow used for investing activities
Cash flows from financing activities:
	$
Net cash flow used for financing activities
		$
Cash at the beginning of the year
Cash at the end of the year		$

Answer 1

Barter Company
Statement of Cash Flows
For the Year Ended December 31, Year 2
Cash Flows from Operating Activities
Net Income		75,800
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation	38,000
Gain on Investment	(25,000)	13,000
Changes in current operating assets and liabilities
Increase in Inventory	(16,000)
Decrease in Accounts Receivable	9,200
Increase in Accounts Payable	12,500	5,700
Net Cash Flow from Operating Activities		94,500
Cash Flows from Investing Activities
Purchase of Equipment	(150,000)
Sale of Investments	125,000
Net Cash Flow used for Investing Activities		(25,000)
Cash Flows from Financing Activities
Payment of Bonds	(75,000)
Issue of Common Stock	75,000
Payment of Cash Dividends	(40,000)
Net Cash Flow used for Financing Activities		(40,000)
Net Increase in Cash Flows		29,500
Cash at the beginning of the year		42,500
Cash at the end of the year		72,000