Problem 13-23 Kate Petusky prepared Addison Controls’ balance sheet and income s
ID: 2603375 • Letter: P
Question
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
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
Explanation / Answer
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