Question

CP12-3 Preparing a Statement of Cash Flows (Indirect Method) [LO 12-2, LO 12-3, LO 12-4, LO 12-5]

Hunter Company is developing its annual financial statements at December 31, 2015. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:

	2015			2014
Balance Sheet at December 31
Cash	$	55,900		$	23,000
Accounts Receivable		36,000			39,000
Inventory		39,000			46,000
Equipment		122,000			112,000
Accumulated Depreciation—Equipment		(42,000	)		(35,000	)
	$	210,900		$	185,000
Accounts Payable	$	31,000		$	27,000
Salaries and Wages Payable		700			1,000
Note Payable (long-term)		47,000			58,000
Common Stock		95,000			70,000
Retained Earnings		37,200			29,000
	$	210,900		$	185,000
Income Statement for 2015
Sales Revenue	$	110,000
Cost of Goods Sold		66,000
Other Expenses		31,000
Net Income	$	13,000

Additional Data:
a.	Bought equipment for cash, $10,000.
b.	Paid $11,000 on the long-term note payable.
c.	Issued new shares of stock for $25,000 cash.
d.	Declared and paid a $4,800 cash dividend.
e.	Other expenses included depreciation, $7,000; salaries and wages, $11,000; taxes, $4,000; utilities, $9,000.
f.	Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.

Required:
1.	Prepare the statement of cash flows for the year ended December 31, 2015, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Cash flow from operating activities
Adjst to reconcile net income to net cash provided by operating activities
Cash flows from investing activities
Cash flows from financing activities

Answer 1