Problem 13-23 Kate Petusky prepared Addison Controls’ balance sheet and income s
ID: 2416182 • Letter: P
Question
Problem 13-23 Kate Petusky prepared Addison Controls’ balance sheet and income statement for 2013. 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: Addison Controls Income Statement For the Year Ended December 31, 2013 Sales revenue $ 128,900 Cost of goods sold 70,870 Gross margin 58,030 Selling expense $13,440 Administrative expense 8,330 Salaries expense 20,380 Depreciation expense 1,900 Interest expense 4,470 48,520 Income before gain and taxes 9,510 Gain on sale of Land 919 Income tax expense 850 Net income $ 9,579 Addison Controls Comparative Balance Sheets As of December 31 2013 2012 Cash $ 5,330 $ 4,250 Accounts receivable, net 6,360 5,550 Inventory 31,970 34,370 Total current assets 43,660 44,170 Property, plant, & equipment, net 211,630 215,420 Total Assets $ 255,290 $ 259,590 Accounts payable $ 3,480 $ 6,140 Accrued expenses 2,510 2,490 Taxes payable 2,170 2,870 Bonds payable 60,070 50,070 Total liabilities 68,230 61,570 Common stock 125,370 125,370 Retained earnings 61,690 72,650 Total stockholders’ equity 187,060 198,020 Total liabilities & stockholders’ equity $ 255,290 $ 259,590 • Equipment with an original cost of $35,110 was sold for $20,369. The book value of the equipment was $19,450. • On June 1, 2013, the company purchased new equipment for cash at a cost of $17,560. • At the end of the year the company issued bonds payable for $10,000 cash. The bonds will mature on December 31, 2017. • The company paid $20,539 in cash dividends for the year. Using the indirect method, prepare Addison Controls' statement of cash flows for 2013. (If an amount decreases cash flow then enter with a negative sign preceding the number or parenthesis, e.g. -15,000 or (15,000).) Addison Control Statement of Cash Flows For the Year Ended December 31, 2013 Change in cashCash flows from financing activitiesCash flows from operating activitiesAdjustments to net incomeCash flows from investing activitiesCash, beginning balanceCash, ending balance Increase in accounts payableIncrease in accrued expensesDecrease in income taxes payableDecrease in inventoriesSale of equipmentIssue bondsIncrease in income taxes payableDecrease in accounts receivablePurchase of equipmentCash dividends on common stockNet income / (loss)DepreciationGain on sale of landIncrease in accounts receivableIncrease in inventoriesDecrease in accounts payableDecrease in accrued expenses $ Change in cashCash, beginning balanceAdjustments to net incomeCash flows from investing activitiesCash, ending balanceCash flows from operating activitiesCash flows from financing activities Purchase of equipment Issue bonds Increase in accounts payable Decrease in accounts receivable Increase in accrued expenses Decrease in accrued expenses Cash dividends on common stock Decrease in income taxes payable Decrease in inventories Increase in income taxes payable Net income / (loss) Sale of equipment Increase in inventories Depreciation Gain on sale of land Increase in accounts receivable Decrease in accounts payable $ Sale of equipment Decrease in accrued expenses Decrease in accounts payable Decrease in income taxes payable Increase in accounts receivable Increase in income taxes payable Increase in accounts payable Purchase of equipment Increase in accrued expenses Net income / (loss) Issue bonds Cash dividends on common stock Depreciation Gain on sale of land Decrease in accounts receivable Increase in inventories Decrease in inventories Issue bonds Gain on sale of land Net income / (loss) Sale of equipment Cash dividends on common stock Increase in accounts payable Decrease in accrued expenses Purchase of equipment Increase in inventories Decrease in income taxes payable Depreciation Increase in accounts receivable Decrease in accounts payable Decrease in inventories Decrease in accounts receivable Increase in income taxes payable Increase in accrued expenses Decrease in accrued expenses Sale of equipment Increase in inventories Decrease in accounts receivable Purchase of equipment Increase in accrued expenses Decrease in income taxes payable Issue bonds Depreciation Gain on sale of land Cash dividends on common stock Increase in accounts receivable Decrease in inventories Net income / (loss) Decrease in accounts payable Increase in accounts payable Increase in income taxes payable Increase in accrued expenses Purchase of equipment Issue bonds Sale of equipment Decrease in accounts payable Cash dividends on common stock Gain on sale of land Net income / (loss) Decrease in accrued expenses Depreciation Increase in accounts receivable Decrease in accounts receivable Decrease in inventories Increase in inventories Decrease in income taxes payable Increase in accounts payable Increase in income taxes payable Purchase of equipment Increase in income taxes payable Sale of equipment Issue bonds Cash dividends on common stock Decrease in accounts receivable Gain on sale of land Decrease in inventories Net income / (loss) Depreciation Increase in accounts receivable Increase in inventories Decrease in accounts payable Increase in accounts payable Decrease in income taxes payable Increase in accrued expenses Decrease in accrued expenses Gain on sale of land Issue bonds Increase in inventories Increase in income taxes payable Decrease in accounts payable Cash dividends on common stock Decrease in inventories Increase in accrued expenses Increase in accounts payable Net income / (loss) Decrease in accrued expenses Purchase of equipment Decrease in income taxes payable Depreciation Increase in accounts receivable Sale of equipment Decrease in accounts receivable Net cash usedprovided by investingfinancingoperating activities Cash flows from operating activitiesCash flows from financing activitiesCash flows from investing activitiesCash, ending balanceChange in cashAdjustments to net incomeCash, beginning balance Decrease in inventories Decrease in accounts payable Gain on sale of land Decrease in accounts receivable Issue bonds Cash dividends on common stock Increase in accounts receivable Increase in inventories Depreciation Net income / (loss) Purchase of equipment Increase in accounts payable Increase in accrued expenses Decrease in accrued expenses Decrease in income taxes payable Increase in income taxes payable Sale of equipment Increase in accrued expenses Issue bonds Decrease in accounts receivable Sale of equipment Decrease in accrued expenses Decrease in inventories Gain on sale of land Decrease in income taxes payable Increase in income taxes payable Decrease in accounts payable Increase in accounts payable Depreciation Cash dividends on common stock Purchase of equipment Net income / (loss) Increase in inventories Increase in accounts receivable Net cash providedused by operatinginvestingfinancing activities Change in cashAdjustments to net incomeCash, beginning balanceCash, ending balanceCash flows from financing activitiesCash flows from operating activitiesCash flows from investing activities Increase in income taxes payable Purchase of equipment Decrease in accounts payable Issue bonds Decrease in inventories Cash dividends on common stock Net income / (loss) Depreciation Increase in inventories Increase in accounts receivable Sale of equipment Decrease in income taxes payable Increase in accounts payable Gain on sale of land Increase in accrued expenses Decrease in accrued expenses Decrease in accounts receivable Decrease in accounts payable Net income / (loss) Sale of equipment Increase in income taxes payable Increase in accounts receivable Decrease in accrued expenses Increase in inventories Decrease in accounts receivable Cash dividends on common stock Increase in accrued expenses Decrease in income taxes payable Decrease in inventories Increase in accounts payable Purchase of equipment Depreciation Issue bonds Gain on sale of land Net cash usedprovided by operatinginvestingfinancing activities Cash flows from investing activitiesCash flows from financing activitiesChange in cashCash, ending balanceCash flows from operating activitiesCash, beginning balanceAdjustments to net income Cash, ending balanceCash flows from operating activitiesCash flows from investing activitiesCash flows from financing activitiesAdjustments to net incomeChange in cashCash, beginning balance Change in cashCash flows from investing activitiesCash flows from financing activitiesCash, beginning balanceCash flows from operating activitiesCash, ending balanceAdjustments to net income $
Explanation / Answer
Statement of cash flow (Indirect method)
For the year ended dec31, 2013
Cash flow from operating activities Net income 9579 Adjustment to reconcile net Income tonet cash used by operating activities Depreciation expense 1900 Gain on sale of equipment (919) Increase in Account receivable (810) Decrease in inventory 2400 Decrease in Account payable (2660) Increase in accrued expenses 20 Decrease in taxes payable (700) Cash used in operating activities (769) Cash flow from investing activities Purchase of equipment (17560) Proceeds from sale of equipment 20369 Net cash from investing activities 2809 Cash flow from financing activities Cash dividend (20539) Sale of Bond 10000 Net cash used in financing activities (10539) Net increase in cash 1080 Cash on jan1,2013 4250 Cash on dec31, 2013 5330