In: Accounting
Statement of Cash Flows—Indirect Method The following balances are available for Chrisman Company: December 31 2017 2016 Cash $9,100 $11,400 Accounts receivable 22,800 17,100 Inventory 18,100 30,200 Prepaid rent 10,200 6,800 Land 85,300 85,300 Plant and equipment 455,000 341,300 Accumulated depreciation (73,900) (34,100) Totals $526,600 $458,000 Accounts payable $13,700 $11,400 Income taxes payable 3,400 5,700 Short-term notes payable 39,800 28,400 Bonds payable 85,000 114,000 Common stock 227,500 170,600 Retained earnings 157,200 127,900 Totals $526,600 $458,000 Bonds were retired during 2017 at face value, plant and equipment were acquired for cash, and common stock was issued for cash. Depreciation expense for the year was $39,800. Net income was reported at $29,300. Required: 1. Prepare a statement of cash flows for 2017 using the indirect method in the Operating Activities section. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash. Chrisman Company Statement of Cash Flows For the Year Ended December 31, 2017 Cash Flows from Operating Activities Net income $ 29,300 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 39,800 Increase in accounts receivable -5,700 Decrease in inventory 12,100 Increase in prepaid rent -3,400 Increase in accounts payable 2,300 Decrease in income taxes payable -2,300 Net cash provided by operating activities $ Cash Flows from Investing Activities Acquisition of plant and equipment $ Cash Flows from Financing Activities Retirement of bonds payable $ Issuance of short-term notes payable Issuance of common stock Net cash provided by financing activities $ Net decrease in cash $ Cash balance, December 31, 2016 Cash balance, December 31, 2017 $ 2. Based on its statement of cash flows, Chrisman did not generate enough cash flow from its operating activities to fund its investing activities. In addition to operating activities, Chrisman generated cash