I dont need help with answering I need help understand when

I don\'t need help with answering, I need help understand when to know its a increase or a decrease, as shown below. (Highlighted)

Cash Flow from Operating Activities

Statement of Cash Flows (Indirect Method) Arctic Company’s income statement and compara-

tive balance sheets as of December 31 of 2016 and 2015 follow:

ARCTIC COMPANY

Income Statement

For the Year Ended December 31, 2016

Sales revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $740,000

Cost of goods sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $534,000

Wages expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,000

Advertising expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,000

Depreciation expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000

Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000

Gain on sale of land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25,000)

772,000

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (32,000)

ARCTIC COMPANY

Balance Sheets

Dec. 31,

2016

Dec. 31,

2015

Assets

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 71,000 $ 28,000

Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000 49,000

Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,000 113,000

Prepaid advertising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 14,000

Plant assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360,000 222,000

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (80,000)

(56,000)

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $510,000 $370,000

Liabilities and Stockholders’ Equity

Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,000 $ 31,000

Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 —

Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,000 —

Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245,000 245,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,000 94,000

Treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,000)

—

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $510,000 $370,000

During 2016, Arctic sold land for $70,000 cash that had originally cost $45,000. Arctic also purchased

equipment for cash, acquired treasury stock for cash, and issued bonds payable for cash. Accounts

payable relate to merchandise purchases.

Required

a. Calculate the change in cash that occurred during 2016.

b. Prepare a statement of cash flows using the indirect method.

I don\'t need help with answering, I need help understand when to know its a increase or a decrease, as shown below. (Highlighted) Cash Flow from Operating Activities
Net Loss						-32,000
Add (deduct) items to convert net income to cash basis
Depreciation expense					24,000
Gain on Sale of Land					-25,000
Accounts Receivable				Decrease	7,000
Inventory					Decrease	6,000
Prepaid Advertising				Decrease	4,000
Accounts Payable				Decrease	-14,000
Interest Payable				Increase	6,000
Cash Flow Provided by Operating Activities			-24,000
Cash Flow from Investing Activities
Sale of Land					70,000
Purchase of Plant Assets				-183,000
Cash Used by Investing Activities				-113,000
Cash Flow from Financing Activities
Issuance of Bonds Payable				210,000
Purchase of Treasury Stock				-30,000
Cash Provided by Financing Activities			180,000
Net	Increase	in Cash				43,000
Cash at Beginning of Year				28,000
Cash at End of Year					71,000

Solution

cash flow statement

Indirect Method

net loss

-32000

depreciation

24000

gain on sale of land

-25000

decrease in accounts receivables

7000

decrease in inventory

6000

decrease in prepaid advertising

4000

decrease in accounts payable

-14000

interest payable

6000

cash flow from operating activities

-24000

cash flow from investing activities

sale of land

70000

purchase of equipment

-183000

cash flow from investing activities

-113000

cash flow from financing activities

issuance of bonds payable

210000

purchase of treasury stock

-30000

cash flow from financing activities

180000

A-

net cash flow during the year

cash flow from operating activities + investing activities + financing activities

43000

opening balance of cash

28000

B-

Year end cash balance

71000

Purchase of equipment

year end value of plant - (value of plant-value of land )

360000-(222000-45000)

183000

	cash flow statement
	Indirect Method
	net loss		-32000
	depreciation		24000
	gain on sale of land		-25000
	decrease in accounts receivables		7000
	decrease in inventory		6000
	decrease in prepaid advertising		4000
	decrease in accounts payable		-14000
	interest payable		6000
	cash flow from operating activities		-24000
	cash flow from investing activities
	sale of land		70000
	purchase of equipment		-183000
	cash flow from investing activities		-113000
	cash flow from financing activities
	issuance of bonds payable		210000
	purchase of treasury stock		-30000
	cash flow from financing activities		180000
A-	net cash flow during the year	cash flow from operating activities + investing activities + financing activities	43000
	opening balance of cash		28000
B-	Year end cash balance		71000
	Purchase of equipment	year end value of plant - (value of plant-value of land )	360000-(222000-45000)	183000