Question

Statement of Cash Flows (Indirect Method)
The Sweet Company’s income statement and comparative balance sheets as of December 31 of 2013 and 2012 are presented below:

SWEET COMPANY Income Statement For the Year Ended December 31, 2013
Sales Revenue		$946,000
Cost of Goods Sold	$507,000
Wages Expense	203,000
Depreciation Expense	60,000
Insurance Expense	13,000
Interest Expense	12,000
Income Tax Expense	57,000
Gain on Sale of Equipment	(16,000)	836,000
Net Income		$110,000

SWEET COMPANY Balance Sheets
	Dec. 31, 2013	Dec. 31, 2012
Assets
Cash	$23,000	$31,000
Accounts Receivable	68,000	43,000
Inventory	177,000	126,000
Prepaid Insurance	9,000	11,000
Plant Assets	887,000	770,000
Accumulated Depreciation	(189,000)	(175,000)
Total Assets	$975,000	$806,000
Liabilities and Stockholders’ Equity
Accounts Payable	$37,000	$27,000
Interest Payable	5,000	-
Income Tax Payable	12,000	16,000
Bonds Payable	135,000	80,000
Common Stock	660,000	585,000
Retained Earnings	178,000	98,000
Treasury Stock	(52,000)	-
Total Liabilities and Stockholders’ Equity	$975,000	$806,000

During the year, Sweet Company sold equipment for $27,000 cash that originally cost $57,000 and had $46,000 accumulated depreciation. New equipment was purchased for cash. Bonds payable and common stock were issued for cash. Cash dividends of $30,000 were declared and paid. At the end of the year, shares of treasury stock were purchased for cash. Accounts payable relate to merchandise purchases.

Required
a. Compute the change in cash that occurred during 2013.
b. Prepare a statement of cash flows using the indirect method.

a. Change in Cash during 2013 $Answer AnswerIncreaseDecrease

b. Use a negative sign with cash outflow answers.

SWEET COMPANY Statement of Cash Flows For Year Ended December 31, 2013
Cash Flow from Operating Activities
Net Income		$Answer
Add (deduct) items to convert net income to cash basis
Depreciation		Answer
Gain on Sale of Equipment		Answer
Accounts Receivable	AnswerIncreaseDecrease	Answer
Inventory	AnswerIncreaseDecrease	Answer
Prepaid Insurance	AnswerIncreaseDecrease	Answer
Accounts Payable	AnswerIncreaseDecrease	Answer
Interest Payable	AnswerIncreaseDecrease	Answer
Income Tax Payable	AnswerIncreaseDecrease	Answer
Cash Flow Provided by Operating Activities		Answer
Cash Flow from Investing Activities
Sale of Equipment		Answer
Purchase of Equipment		Answer
Cash Used by Investing Activities		Answer
Cash Flow from Financing Activities
Issuance of Bonds Payable		Answer
Purchase of Common Stock		Answer
Payment of Dividends		Answer
Purchase of Treasury Stock		Answer
Cash Provided by Financing Activities		Answer
Net AnswerIncreaseDecrease in Cash		Answer
Cash at Beginning of Year		Answer
Cash at End of Year		$Answer

Answer 1

Change in Cash During 2013:
Opening Cash Balance	31000
Closing Cash Balance	23000
Decrease in Cash	-8000
				Sales Value	27000
Sweet Company
Cash flow Statements				Cost	57000
for the year ended Dec 31,2013				Less: AD	46000
Cash Flow from Operating Activities				Book Value	11000
Net Income		110000		Gain On Sales	16000
Add (Deduct) items to convert net income to cash basis
Depreciation	60000			Equipment Account
Gain on Sale of Equipment	-16000			To Bal BD	770000	By Sales	57000
Account Recievable	-25000			To Purchase	174000
Inventory	-51000					By Bal Cd	887000
Prepaid Insurance	2000			Total	944000	Total	944000
Accounts Payable	10000
Interest Payable	5000
Income tax Payable	-4000
Net Cash Flow from Operating Expense		91000
Cash Flow from Investing Activities
Sales of Equipment	27000
Purchase of Investments	-174000
Cash Flow from Investing Activities		-147000
Cash Flow from Financing Activities
Issue of Bonds Payable	55000
Purchase of Common Stock	75000
Payments of Dividend	-30000
Purchase of Tresury Stock	-52000
Cash Flow from Financing Activities		48000
Net Increase(Decrease) in Cash		-8000
Opening Cash Balance		31000
Closing Cash Balance		23000