Statement of Cash FlowsIndirect Method The comparative balan

Statement of Cash Flows—Indirect Method

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

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

Required:

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.

	Dec. 31, 20Y2		Dec. 31, 20Y1
Assets
Cash	$ 842,190			$ 907,230
Accounts receivable (net)	766,390			699,020
Inventories	1,162,220			1,069,580
Prepaid expenses	26,950			32,000
Land	289,710			437,940
Buildings	1,339,080			825,350
Accumulated depreciation-buildings	(378,990)			(353,720)
Equipment	471,630			416,880
Accumulated depreciation-equipment	(129,700)			(145,700)
Total assets	$4,389,480			$3,888,580
Liabilities and Stockholders\' Equity
Accounts payable (merchandise creditors)	$ 834,000			$ 880,090
Bonds payable	245,810			0
Common stock, $20 par	289,000			107,000
Paid-in capital: Excess of issue price over par-common stock	694,000			512,000
Retained earnings	2,326,670			2,389,490
Total liabilities and stockholders\' equity	$4,389,480			$3,888,580

Solution

Answer

Whitman Co.

Statement of Cash Flows

For the Year Ended December 31, 20Y2

Working (reference)

Cash flows from operating activities:

*See retained earnings a/c

Net Loss

$                  (30,250.00)

Adjustments to reconcile net loss to net cashflow from operating activities:

*See Land account

Loss on sale of land [148230 - 137900]

$           10,330.00

* See Accumulated Depreciation accounts

Depreciation expenses [25270 + 29900]

$           55,170.00

$                     65,500.00

Changes in current operating assets and liabilities:

*See Balance Sheet

Increase in A/R net

$        (67,370.00)

*See Balance Sheet

Increase in Inventories

$        (92,640.00)

*See Balance Sheet

Decrease in Prepaid Expenses

$             5,050.00

*See Balance Sheet

Decrease in A/P

$        (46,090.00)

$               (2,01,050.00)

A

Net cash flow used for operating activities

$               (1,65,800.00)

Cash flows from investing activities:

*See Land account

Sale of Land

$       1,37,900.00

*See Building a/c

Purchase of Building

$     (5,13,730.00)

*See Equipment a/c

Purchase of Equipments

$     (1,00,650.00)

B

Net cash flow used for investing activities

$               (4,76,480.00)

Cash flows from financing activities:

*See Bonds payable a/c

Bonds issued

$       2,45,810.00

* See Common Stock & PIC excess of par a/c

Common Stock issued [182000 + 182000]

$       3,64,000.00

*See retained earnings a/c

Dividends paid

$        (32,570.00)

C

Net cash flow from financing activities

$                 5,77,240.00

D=A+B+C

(Decrease) in Cash

$                  (65,040.00)

E

Cash at the beginning of the year

$                 9,07,230.00

F=D+E

Cash at the end of the year

$                 8,42,190.00

	Whitman Co.
	Statement of Cash Flows
	For the Year Ended December 31, 20Y2
Working (reference)	Cash flows from operating activities:
*See retained earnings a/c	Net Loss		$                  (30,250.00)
	Adjustments to reconcile net loss to net cashflow from operating activities:
*See Land account	Loss on sale of land [148230 - 137900]	$           10,330.00
* See Accumulated Depreciation accounts	Depreciation expenses [25270 + 29900]	$           55,170.00	$                     65,500.00
	Changes in current operating assets and liabilities:
*See Balance Sheet	Increase in A/R net	$        (67,370.00)
*See Balance Sheet	Increase in Inventories	$        (92,640.00)
*See Balance Sheet	Decrease in Prepaid Expenses	$             5,050.00
*See Balance Sheet	Decrease in A/P	$        (46,090.00)	$               (2,01,050.00)
A	Net cash flow used for operating activities		$               (1,65,800.00)
	Cash flows from investing activities:
*See Land account	Sale of Land	$       1,37,900.00
*See Building a/c	Purchase of Building	$     (5,13,730.00)
*See Equipment a/c	Purchase of Equipments	$     (1,00,650.00)
B	Net cash flow used for investing activities		$               (4,76,480.00)
	Cash flows from financing activities:
*See Bonds payable a/c	Bonds issued	$       2,45,810.00
* See Common Stock & PIC excess of par a/c	Common Stock issued [182000 + 182000]	$       3,64,000.00
*See retained earnings a/c	Dividends paid	$        (32,570.00)
C	Net cash flow from financing activities		$                 5,77,240.00
D=A+B+C	(Decrease) in Cash		$                  (65,040.00)
E	Cash at the beginning of the year		$                 9,07,230.00
F=D+E	Cash at the end of the year		$                 8,42,190.00