Problem 1323 Kate Petusky prepared Addison Controls balance

Problem 13-23

Kate Petusky prepared Addison Controls’ balance sheet and income statement for 2016. Before she could complete the statement of cash flows, she had to leave town to attend to a family emergency. Because the full set of statements must be provided to the auditors today, Addison’s president, Lance Meyers, has asked you to prepare the statement of cash flows. Meyers has provided you with the balance sheets and income statement that Petusky prepared, as well as some notes she made:

Using the indirect method, prepare Addison Controls\' statement of cash flows for 2016. (Show amounts that decrease cash flow with either a - sign, e.g. -15,000 or in parentheses, e.g. (15,000).)

Addison Control
Statement of Cash Flows
For the Year Ended December 31, 2016

Addison Controls Income Statement For the Year Ended December 31, 2016
Sales revenue				$ 127,900
Cost of goods sold				69,800
Gross margin				58,100
Selling expense		$13,000
Administrative expense		8,000
Salaries expense		20,000
Depreciation expense		1,900
Interest expense		4,000		46,900
Income before gain and taxes				11,200
Gain on sale of Land				900
Income tax expense				800
Net income				$ 11,300

Solution

Addison Controls Statement of Cash Flows (Indirect Method) For the Year ended Dec 31, 2016 Cash Flow from opearating activities: Net Income              11,300 Add/(Less) non cash effects on operating activities Depreciation expense - Plant & Equipment              1,900 Gain on Sale of Land               (900) Increase in Accounts Receivables               (800) Decrease in Inventory              2,500 Decrease in Accounts Payables           (2,500) Increase in Accrued Liabilities                 200 Decrease in Income Tax Payable               (500)                  (100) Net Cash provided by operating activities              11,200 Cash flow from Investing Activities Purchase of Equipment         (17,500) Sale of Equipment           20,300 Cash Flow / (used) from Investing activities                 2,800 Cash Flow from Financing Activities Issue of Bonds           10,000 Cash dividend paid         (23,200) Cash Flow from Financing Activities            (13,200) Net Increase / (Decrease) in Cash                    800 Cash balance at the beginning - Dec 31, 2015                 4,300 Cash balance at the end - Dec 31, 2016.                 5,100