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BE23-3 Novak Corporation is preparing its 2014 statement of cashflows, using the indirect method. Pre- sented below is a list ofitems that may affect the statement. Using the code below, indicatehow each item will affect Novak’s 2014 statement of cash flows.Items ____ (a) ____ (b) ____ (c) ____ (d) ____ (e) ____ (f) ____(g) ____ (h) ____ (i) Purchase of land and building. Decrease inaccounts receivable. Issuance of stock. Depreciation expense. Saleof land at book value. Sale of land at a gain. Payment ofdividends. Increase in accounts receivable. Purchase ofavailable-for-sale investment.

____ (j) ____ (k) ____ (l) ____ (m) ____ (n) ____ (o) ____ (p)____ (q) ____ (r) Increase in accounts payable. Decrease inaccounts payable. Loan from bank by signing note. Purchase ofequipment using a note. Increase in inventory. Issuance of bonds.Redemption of bonds payable. Sale of equipment at a loss. Purchaseof treasury stock.

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28 Sep 2019

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Exercise 12-7

Shown below are comparative balance sheets for IndigoCorporation.

Indigo Corporation

Comparative Balance Sheets

December 31

Assets

2017

2016

Cash

$ 141,984

$ 45,936

Accounts receivable

183,744

158,688

Inventory

348,696

394,632

Land

167,040

208,800

Equipment

542,880

417,600

Accumulated depreciation—equipment

(137,808

)

(66,816

)

Total

$1,246,536

$1,158,840

Liabilities and Stockholders’ Equity

Accounts payable

$ 81,432

$ 89,784

Bonds payable

313,200

417,600

Common stock ($1 par)

451,008

363,312

Retained earnings

400,896

288,144

Total

$1,246,536

$1,158,840

Additional information:

1.

Net income for 2017 was $194,184.

2.

Depreciation expense was $70,992.

3.

Cash dividends of $81,432 were declared and paid.

4.

Bonds payable amounting to $104,400 were redeemed for cash$104,400.

5.

Common stock was issued for $87,696 cash.

6.

No equipment was sold during 2017.

7.

Land was sold for its book value.

Prepare a statement of cash flows for 2017 using the indirectmethod. (Show amounts that decrease cash flow witheither a - sign e.g. -45,000, or in parenthesis e.g.(45,000)).

Indigo Corporation

Statement of Cash Flows

December 31, 2017For the Year Ended December 31, 2017For theQuarter Ended December 31, 2017

Cash at Beginning of PeriodCash at End of PeriodCash Flows fromFinancing ActivitiesCash Flows from Investing ActivitiesCash Flowsfrom Operating ActivitiesNet Cash Provided by FinancingActivitiesNet Cash Provided by Investing ActivitiesNet CashProvided by Operating ActivitiesNet Cash used by FinancingActivitiesNet Cash used by Investing ActivitiesNet Cash used byOperating ActivitiesNet Decrease in CashNet Increase in Cash

Decrease inAccounts Payable Decrease in AccountsReceivable Decrease inInventory DepreciationExpense Increase in AccountsPayable Increase in AccountsReceivable Increase inInventory Issuance of CommonStock NetIncome Payment of CashDividends Purchase ofEquipment Redemption ofBonds Sale of Land

$

194184

Adjustments to reconcile net income to

Cash at Beginning of PeriodCash at End of PeriodCash Flows fromFinancing ActivitiesCash Flows from Investing ActivitiesCash Flowsfrom Operating ActivitiesNet Cash Provided by FinancingActivitiesNet Cash Provided by Investing ActivitiesNet CashProvided by Operating ActivitiesNet Cash used by FinancingActivitiesNet Cash used by Investing ActivitiesNet Cash used byOperating ActivitiesNet Decrease in CashNet Increase in Cash

Decrease inAccounts Payable Decrease in AccountsReceivable Decrease inInventory DepreciationExpense Increase in AccountsPayable Increase in AccountsReceivable Increase inInventory Issuance of CommonStock NetIncome Payment of CashDividends Purchase ofEquipment Redemption ofBonds Sale of Land

$

70992

Decrease inAccounts Payable Decrease in AccountsReceivable Decrease inInventory DepreciationExpense Increase in AccountsPayable Increase in AccountsReceivable Increase inInventory Issuance of CommonStock NetIncome Payment of CashDividends Purchase ofEquipment Redemption ofBonds Sale of Land

-8352

Decrease inAccounts Payable Decrease in AccountsReceivable Decrease inInventory DepreciationExpense Increase in AccountsPayable Increase in AccountsReceivable Increase inInventory Issuance of CommonStock NetIncome Payment of CashDividends Purchase ofEquipment Redemption ofBonds Sale of Land

-25056

Decrease inAccounts Payable Decrease in AccountsReceivable Decrease inInventory DepreciationExpense Increase in AccountsPayable Increase in AccountsReceivable Increase inInventory Issuance of CommonStock NetIncome Payment of CashDividends Purchase ofEquipment Redemption ofBonds Sale of Land

45936

83520

Cash atBeginning of Period Cash at End ofPeriod Cash Flows from FinancingActivities Cash Flows from InvestingActivities Cash Flows from OperatingActivities Net Cash Provided by FinancingActivities Net Cash Provided by InvestingActivities Net Cash Provided by OperatingActivities Net Cash used by FinancingActivities Net Cash used by InvestingActivities Net Cash used by OperatingActivities Net Decrease inCash Net Increase in Cash

277704

Cash at Beginning of PeriodCash at End of PeriodCash Flows fromFinancing ActivitiesCash Flows from Investing ActivitiesCash Flowsfrom Operating ActivitiesNet Cash Provided by FinancingActivitiesNet Cash Provided by Investing ActivitiesNet CashProvided by Operating ActivitiesNet Cash used by FinancingActivitiesNet Cash used by Investing ActivitiesNet Cash used byOperating ActivitiesNet Decrease in CashNet Increase in Cash

Decrease inAccounts Payable Decrease in AccountsReceivable Decrease inInventory DepreciationExpense Increase in AccountsPayable Increase in AccountsReceivable Increase inInventory Issuance of CommonStock NetIncome Payment of CashDividends Purchase ofEquipment Redemption ofBonds Sale of Land

137808

Decrease inAccounts Payable Decrease in AccountsReceivable Decrease inInventory DepreciationExpense Increase in AccountsPayable Increase in AccountsReceivable Increase inInventory Issuance of CommonStock NetIncome Payment of CashDividends Purchase ofEquipment Redemption ofBonds Sale of Land

125280

Cash atBeginning of Period Cash at End ofPeriod Cash Flows from FinancingActivities Cash Flows from InvestingActivities Cash Flows from OperatingActivities Net Cash Provided by FinancingActivities Net Cash Provided by InvestingActivities Net Cash Provided by OperatingActivities Net Cash used by FinancingActivities Net Cash used by InvestingActivities Net Cash used by OperatingActivities Net Decrease inCash Net Increase in Cash

263088

Cash at Beginning of PeriodCash at End of PeriodCash Flows fromFinancing ActivitiesCash Flows from Investing ActivitiesCash Flowsfrom Operating ActivitiesNet Cash Provided by FinancingActivitiesNet Cash Provided by Investing ActivitiesNet CashProvided by Operating ActivitiesNet Cash used by FinancingActivitiesNet Cash used by Investing ActivitiesNet Cash used byOperating ActivitiesNet Decrease in CashNet Increase in Cash

Decrease inAccounts Payable Decrease in AccountsReceivable Decrease inInventory DepreciationExpense Increase in AccountsPayable Increase in AccountsReceivable Increase inInventory Issuance of CommonStock NetIncome Payment of CashDividends Purchase ofEquipment Redemption ofBonds Sale of Land

-104400

Decrease inAccounts Payable Decrease in AccountsReceivable Decrease inInventory DepreciationExpense Increase in AccountsPayable Increase in AccountsReceivable Increase inInventory Issuance of CommonStock NetIncome Payment of CashDividends Purchase ofEquipment Redemption ofBonds Sale of Land

87696

Decrease inAccounts Payable Decrease in AccountsReceivable Decrease inInventory DepreciationExpense Increase in AccountsPayable Increase in AccountsReceivable Increase inInventory Issuance of CommonStock NetIncome Payment of CashDividends Purchase ofEquipment Redemption ofBonds Sale of Land

81432

Cash atBeginning of Period Cash at End ofPeriod Cash Flows from FinancingActivities Cash Flows from InvestingActivities Cash Flows from OperatingActivities Net Cash Provided by FinancingActivities Net Cash Provided by InvestingActivities Net Cash Provided by OperatingActivities Net Cash used by FinancingActivities Net Cash used by InvestingActivities Net Cash used by OperatingActivities Net Decrease inCash Net Increase in Cash

64728

Cash at Beginning of PeriodCash at End of PeriodCash Flows fromFinancing ActivitiesCash Flows from Investing ActivitiesCash Flowsfrom Operating ActivitiesNet Cash Provided by FinancingActivitiesNet Cash Provided by Investing ActivitiesNet CashProvided by Operating ActivitiesNet Cash used by FinancingActivitiesNet Cash used by Investing ActivitiesNet Cash used byOperating ActivitiesNet Decrease in CashNet Increase in Cash

605520

Cash at Beginning of PeriodCash at End of PeriodCash Flows fromFinancing ActivitiesCash Flows from Investing ActivitiesCash Flowsfrom Operating ActivitiesNet Cash Provided by FinancingActivitiesNet Cash Provided by Investing ActivitiesNet CashProvided by Operating ActivitiesNet Cash used by FinancingActivitiesNet Cash used by Investing ActivitiesNet Cash used byOperating ActivitiesNet Decrease in CashNet Increase in Cash

45936

Cash at Beginning of PeriodCash at End of PeriodCash Flows fromFinancing ActivitiesCash Flows from Investing ActivitiesCash Flowsfrom Operating ActivitiesNet Cash Provided by FinancingActivitiesNet Cash Provided by Investing ActivitiesNet CashProvided by Operating ActivitiesNet Cash used by FinancingActivitiesNet Cash used by Investing ActivitiesNet Cash used byOperating ActivitiesNet Decrease in CashNet Increase in Cash

$

651456

IE

is this right

Statement of Cash Flows

The following is a list of the items to be included in thepreparation of Warrick Company's 2016 statement of cash flows:

Net income, $59,200

Payment for purchase of building, $98,000

Increase in accounts receivable, $7,400

Proceeds from issuance of common stock, $37,100

Increase in accounts payable, $4,500

Proceeds from sale of land, $7,000

Depreciation expense, $12,600

Payment of dividends, $36,000

Gain on sale of land, $5,300

Decrease in inventory, $3,700

Payment for purchase of long-term investments, $9,600

Amortization of discount on bonds payable, $1,900

Proceeds from issuance of note, $18,000

Increase in deferred taxes payable, $5,000

Equipment acquired by capital lease, $19,500

Decrease in salaries payable, $2,300

Beginning cash balance, $20,300

Required

1. Prepare the statement of cash flows.

WARRICK COMPANY
Statement of Cash Flows
For Year Ended December 31, 2016
Operating Activities:
Net income $
Adjustment for noncash income items:
Add: Depreciation expense
Add: Amortization of discount on bonds payable
Add: Accumulated depreciation
Less: Gain on sale of land
Adjustments for cash flow effects
from working capital items:
Increase in accounts receivable
Decrease in inventory
Increase in accounts payable
Decrease in salaries payable
Net cash provided by operating activities $
Investing Activities:
Payment for purchase of building $
Proceeds from sale of land
Payment for purchase of long-term investments
Net cash used for investing activities
Financing Activities:
Proceeds from issuance of common stock $
Payment of accounts payable
Proceeds from issuance of note
Net cash provided by financing activities
Net Decrease in Cash $
Cash, January 1, 2016
Cash, December 31, 2016 $
Investing and Financing Activities Not Affecting Cash
Investing Activities:
Acquisition of equipment under capital lease $
Financing Activities:
Incurrence of capital lease obligation for equipment

Problem 13-23 Kate Petusky prepared Addison Controls’ balancesheet and income statement for 2013. Before she could complete thestatement of cash flows, she had to leave town to attend to afamily emergency. Because the full set of statements must beprovided to the auditors today, Addison’s president, Lance Meyers,has asked you to prepare the statement of cash flows. Meyers hasprovided you with the balance sheets and income statement thatPetusky prepared, as well as some notes she made: Addison ControlsIncome Statement For the Year Ended December 31, 2013 Sales revenue$ 128,900 Cost of goods sold 70,870 Gross margin 58,030 Sellingexpense $13,440 Administrative expense 8,330 Salaries expense20,380 Depreciation expense 1,900 Interest expense 4,470 48,520Income before gain and taxes 9,510 Gain on sale of Land 919 Incometax expense 850 Net income $ 9,579 Addison Controls ComparativeBalance Sheets As of December 31 2013 2012 Cash $ 5,330 $ 4,250Accounts receivable, net 6,360 5,550 Inventory 31,970 34,370 Totalcurrent assets 43,660 44,170 Property, plant, & equipment, net211,630 215,420 Total Assets $ 255,290 $ 259,590 Accounts payable $3,480 $ 6,140 Accrued expenses 2,510 2,490 Taxes payable 2,1702,870 Bonds payable 60,070 50,070 Total liabilities 68,230 61,570Common stock 125,370 125,370 Retained earnings 61,690 72,650 Totalstockholders’ equity 187,060 198,020 Total liabilities &stockholders’ equity $ 255,290 $ 259,590 • Equipment with anoriginal cost of $35,110 was sold for $20,369. The book value ofthe equipment was $19,450. • On June 1, 2013, the company purchasednew equipment for cash at a cost of $17,560. • At the end of theyear the company issued bonds payable for $10,000 cash. The bondswill mature on December 31, 2017. • The company paid $20,539 incash dividends for the year. Using the indirect method, prepareAddison Controls' statement of cash flows for 2013. (If an amountdecreases cash flow then enter with a negative sign preceding thenumber or parenthesis, e.g. -15,000 or (15,000).) Addison ControlStatement of Cash Flows For the Year Ended December 31, 2013 Changein cashCash flows from financing activitiesCash flows fromoperating activitiesAdjustments to net incomeCash flows frominvesting activitiesCash, beginning balanceCash, ending balanceIncrease in accounts payableIncrease in accrued expensesDecrease inincome taxes payableDecrease in inventoriesSale of equipmentIssuebondsIncrease in income taxes payableDecrease in accountsreceivablePurchase of equipmentCash dividends on common stockNetincome / (loss)DepreciationGain on sale of landIncrease in accountsreceivableIncrease in inventoriesDecrease in accountspayableDecrease in accrued expenses $ Change in cashCash, beginningbalanceAdjustments to net incomeCash flows from investingactivitiesCash, ending balanceCash flows from operatingactivitiesCash flows from financing activities Purchase ofequipment Issue bonds Increase in accounts payable Decrease inaccounts receivable Increase in accrued expenses Decrease inaccrued expenses Cash dividends on common stock Decrease in incometaxes payable Decrease in inventories Increase in income taxespayable Net income / (loss) Sale of equipment Increase ininventories Depreciation Gain on sale of land Increase in accountsreceivable Decrease in accounts payable $ Sale of equipmentDecrease in accrued expenses Decrease in accounts payable Decreasein income taxes payable Increase in accounts receivable Increase inincome taxes payable Increase in accounts payable Purchase ofequipment Increase in accrued expenses Net income / (loss) Issuebonds Cash dividends on common stock Depreciation Gain on sale ofland Decrease in accounts receivable Increase in inventoriesDecrease in inventories Issue bonds Gain on sale of land Net income/ (loss) Sale of equipment Cash dividends on common stock Increasein accounts payable Decrease in accrued expenses Purchase ofequipment Increase in inventories Decrease in income taxes payableDepreciation Increase in accounts receivable Decrease in accountspayable Decrease in inventories Decrease in accounts receivableIncrease in income taxes payable Increase in accrued expensesDecrease in accrued expenses Sale of equipment Increase ininventories Decrease in accounts receivable Purchase of equipmentIncrease in accrued expenses Decrease in income taxes payable Issuebonds Depreciation Gain on sale of land Cash dividends on commonstock Increase in accounts receivable Decrease in inventories Netincome / (loss) Decrease in accounts payable Increase in accountspayable Increase in income taxes payable Increase in accruedexpenses Purchase of equipment Issue bonds Sale of equipmentDecrease in accounts payable Cash dividends on common stock Gain onsale of land Net income / (loss) Decrease in accrued expensesDepreciation Increase in accounts receivable Decrease in accountsreceivable Decrease in inventories Increase in inventories Decreasein income taxes payable Increase in accounts payable Increase inincome taxes payable Purchase of equipment Increase in income taxespayable Sale of equipment Issue bonds Cash dividends on commonstock Decrease in accounts receivable Gain on sale of land Decreasein inventories Net income / (loss) Depreciation Increase inaccounts receivable Increase in inventories Decrease in accountspayable Increase in accounts payable Decrease in income taxespayable Increase in accrued expenses Decrease in accrued expensesGain on sale of land Issue bonds Increase in inventories Increasein income taxes payable Decrease in accounts payable Cash dividendson common stock Decrease in inventories Increase in accruedexpenses Increase in accounts payable Net income / (loss) Decreasein accrued expenses Purchase of equipment Decrease in income taxespayable Depreciation Increase in accounts receivable Sale ofequipment Decrease in accounts receivable Net cash usedprovided byinvestingfinancingoperating activities Cash flows from operatingactivitiesCash flows from financing activitiesCash flows frominvesting activitiesCash, ending balanceChange in cashAdjustmentsto net incomeCash, beginning balance Decrease in inventoriesDecrease in accounts payable Gain on sale of land Decrease inaccounts receivable Issue bonds Cash dividends on common stockIncrease in accounts receivable Increase in inventoriesDepreciation Net income / (loss) Purchase of equipment Increase inaccounts payable Increase in accrued expenses Decrease in accruedexpenses Decrease in income taxes payable Increase in income taxespayable Sale of equipment Increase in accrued expenses Issue bondsDecrease in accounts receivable Sale of equipment Decrease inaccrued expenses Decrease in inventories Gain on sale of landDecrease in income taxes payable Increase in income taxes payableDecrease in accounts payable Increase in accounts payableDepreciation Cash dividends on common stock Purchase of equipmentNet income / (loss) Increase in inventories Increase in accountsreceivable Net cash providedused by operatinginvestingfinancingactivities Change in cashAdjustments to net incomeCash, beginningbalanceCash, ending balanceCash flows from financing activitiesCashflows from operating activitiesCash flows from investing activitiesIncrease in income taxes payable Purchase of equipment Decrease inaccounts payable Issue bonds Decrease in inventories Cash dividendson common stock Net income / (loss) Depreciation Increase ininventories Increase in accounts receivable Sale of equipmentDecrease in income taxes payable Increase in accounts payable Gainon sale of land Increase in accrued expenses Decrease in accruedexpenses Decrease in accounts receivable Decrease in accountspayable Net income / (loss) Sale of equipment Increase in incometaxes payable Increase in accounts receivable Decrease in accruedexpenses Increase in inventories Decrease in accounts receivableCash dividends on common stock Increase in accrued expensesDecrease in income taxes payable Decrease in inventories Increasein accounts payable Purchase of equipment Depreciation Issue bondsGain on sale of land Net cash usedprovided byoperatinginvestingfinancing activities Cash flows from investingactivitiesCash flows from financing activitiesChange in cashCash,ending balanceCash flows from operating activitiesCash, beginningbalanceAdjustments to net income Cash, ending balanceCash flowsfrom operating activitiesCash flows from investing activitiesCashflows from financing activitiesAdjustments to net incomeChange incashCash, beginning balance Change in cashCash flows from investingactivitiesCash flows from financing activitiesCash, beginningbalanceCash flows from operating activitiesCash, endingbalanceAdjustments to net income $

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