Question

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

The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows:

	Dec. 31, 20Y2			Dec. 31, 20Y1
Assets
Cash	$ 701,950			$ 755,530
Accounts receivable (net)	638,770			582,620
Inventories	968,690			891,480
Prepaid expenses	22,460			26,670
Land	241,470			365,010
Buildings	1,116,100			687,910
Accumulated depreciation-buildings	(315,880)			(294,820)
Equipment	393,090			347,470
Accumulated depreciation-equipment	(108,100)			(121,440)
Total assets	$3,658,550			$3,240,430
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors)	$ 695,120			$ 733,540
Bonds payable	204,880			0
Common stock, $20 par	241,000			89,000
Paid-in capital: Excess of issue price over par-common stock	579,000			427,000
Retained earnings	1,938,550			1,990,890
Total liabilities and stockholders' equity	$3,658,550			$3,240,430

The noncurrent asset, noncurrent liability, and stockholders’ equity accounts for 20Y2 are as follows:

ACCOUNT Land				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
20Y2
Jan. 1	Balance			365,010
Apr. 20	Realized $114,900 cash from sale		123,540	241,470

ACCOUNT Buildings				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
20Y2
Jan. 1	Balance			687,910
Apr. 20	Acquired for cash	428,190		1,116,100

ACCOUNT Accumulated Depreciation-Buildings				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
20Y2
Jan. 1	Balance				294,820
Dec. 31	Depreciation for year		21,060		315,880

ACCOUNT Equipment				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
20Y2
Jan. 1	Balance			347,470
Jan. 26	Discarded, no salvage		38,200	309,270
Aug. 11	Purchased for cash	83,820		393,090

ACCOUNT Accumulated Depreciation-Equipment				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
20Y2
Jan. 1	Balance				121,440
Jan. 26	Equipment discarded	38,200			83,240
Dec. 31	Depreciation for year		24,860		108,100

ACCOUNT Bonds Payable				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
20Y2
May 1	Issued 20-year bonds		204,880		204,880

ACCOUNT Common Stock, $20 par				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
20Y2
Jan. 1	Balance				89,000
Dec. 7	Issued 7,600 shares of common stock for $40 per share		152,000		241,000

ACCOUNT Paid-in Capital in Excess of Par-Common Stock				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
20Y2
Jan. 1	Balance				427,000
Dec. 7	Issued 7,600 shares of common stock for $40 per share		152,000		579,000

ACCOUNT Retained Earnings				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
20Y2
Jan. 1	Balance				1,990,890
Dec. 31	Net loss	25,200			1,965,690
Dec. 31	Cash dividends	27,140			1,938,550

Answer 1

Statement of Cash flows
Cash flows from Operating activities:
Net loss of the year			-25200
Adjustment required
Depreciation for equipment			24860
Depreciation on building			21060
Loss on sale of land (123540-114900)			8640
Increase in Accounts receivable			-56150
Increase in inventory			-77210
Decrease in Prepaid expense			4210
Decrease in Accounts payable			-38420
Net cash used n Operating activities				-138210
Cashflows from Investing activities
Sale of land			114900
Purchase of Building			-428190
Purchasse of Equipment			-83820
Net cash used in investing activities				-397110
Cashflows from Financing activities
Issue of Bonds			204880
Issue of Common Stock			304000
Dividend paid			-27140
Net cash provided from Financing activities				481740
Net decrease in cash				-53580
Beginning balance of cash				755530
Ending balance of cash				701950