Question

The income statement, balance sheets, and additional information for Great Adventures, Inc., are provided below.

GREAT ADVENTURES, INC.
Income Statement
For the year ended December 31, 2022
Net revenues:				$	195,920
Expenses:
Cost of goods sold	$	40,000
Operating expenses		69,700
Depreciation expense		19,500
Interest expense		10,526
Income tax expense		16,000
Total expenses					155,726
Net income				$	40,194

GREAT ADVENTURES, INC.
Balance Sheets
December 31, 2022 and 2021
									Increase (I) or
	2022				2021				Decrease (D)
Assets
Current assets:
Cash	$	295,106			$	54,600			$	240,506		(I)
Accounts receivable		50,300				0				50,300		(I)
Inventory		10,000				0				10,000		(I)
Other current assets		1,200				5,700				4,500		(D)
Long-term assets:
Land		800,000				0				800,000		(I)
Buildings		890,000				0				890,000		(I)
Equipment		92,900				55,000				37,900		(I)
Accumulated depreciation		(28,250	)			(8,750	)			19,500		(I)
Total assets	$	2,111,256			$	116,750
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	34,000			$	3,400			$	30,600		(I)
Interest payable		900				900
Income tax payable		16,000				14,300				1,700		(I)
Other current liabilities		30,000				0				30,000		(I)
Notes payable (current and long-term)		823,212				33,000				790,212		(I)
Stockholders’ equity:
Common stock		150,000				20,000				130,000		(I)
Paid-in capital		1,177,000				0				1,177,000		(I)
Retained earnings		60,144				34,950				25,194		(I)
Treasury stock		(180,000	)			0				(180,000	)	(I)
Total liabilities and stockholders’ equity	$	2,111,256			$	116,750

Additional Information for 2022:

1. Land of $800,000 was obtained by issuing a note payable to the seller.
2. Buildings of $890,000 and equipment of $37,900 were purchased using cash.
3. Monthly payments during the year reduced notes payable by $9,788.
4. Issued common stock for $1,300,000.
5. Purchased 13,000 shares of treasury stock for $30 per share.
6. Sold 7,000 shares of treasury stock at $31 per share.
7. Declared and paid a cash dividend of $15,000.

Required:

Prepare the statement of cash flows for the year ended December 31, 2022, using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

Answer 1

		Great Adventure Inc,
		Statement of cash flow
		For the year ended 2022
		Cash flow from Operating Activities
		Profit before taxes	$	56,194
		Adjustment for non cash and non operating activities
		Depreciation		19,500
		Interest Expenss		10,526
		Taxes		(16,000)
		Changes in working capital
		Increase in accounts receivable		(50,300)
		Increase in inventories		(10,000)
		Decrease in other current asset		4,500
		Increase in accounts payable		30,600
		Increase in income tax payable		1,700
		Increase in other current liabilities		30,000
		Cash provided by operating activities		76,720
		Cash flow from Investing Activities
		Cash paid to purchase building		(890,000)
		Cash paid to purchase equipment		(37,900)
		Cash used in investing activities		(927,900)
		Cash Flows from Financing Activities
		Investment by stockholders		-
		Cash dividend paid to stockholders		(15,000)
		Interest expenses		(10,526)
		Issue of shares		1,300,000
		Treasury stocks		(173,000)
		Notes payable		(9,788)
		Cash Provided by Financing Activities		1,091,686
		Change in Cash		240,506
		Beginning Cash on January 1,2008	$	54,600
		Ending Cash on December 31, 2009	$	295,106