Statement of Cash Flows (Indirect Method) Arctic Company's income statement and comparative balance sheets as of December 31 of 2013 and 2012 follow: ARCTIC COMPANY Income Statement For the Year Ended December 31, 2013 Sales Revenue $946,400 Cost of Goods Sold $694,200 Wages Expense 247,000 Advertising Expense 40,300 Depreciation Expense 28,600 Interest Expense 23,400 Gain on Sale of Land (32,500) 1,001,000 Net Loss $(54,600) ARCTIC COMPANY Balance Sheets Dec. 31, 2013 Dec. 31, 2012 Assets Cash $63,700 $36,400 Accounts Receivable 54,600 65,000 Inventory 139,100 146,900 Prepaid Advertising 13,000 16,900 Plant Assets 468,000 288,600 Accumulated Depreciation (101,400) (72,800) Total Assets $637,000 $481,000 Liabilities and Stockholders' Equity Accounts Payable $22,100 $40,300 Interest Payable 7,800 - Bonds Payable 260,000 - Common Stock 318,500 318,500 Retained Earnings 67,600 122,200 Treasury Stock (39,000) - Total Liabilities and Stockholders' Equity $637,000 $481,000 During 2013, Arctic sold land for $91,000 cash that had originally cost $58,500. 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 2013. b. Prepare a statement of cash flows using the indirect method. a. Change in Cash during 2013 $Answer AnswerIncreaseDecrease b. Use a negative sign with cash outflow answers. ARTIC COMPANY Statement of Cash Flows For Year Ended December 31, 2013 Cash Flow from Operating Activities Net Loss Answer Add (deduct) items to convert net income to cash basis Depreciation Answer Gain on Sale of Land Answer Accounts Receivable AnswerIncreaseDecrease Answer Inventory AnswerIncreaseDecrease Answer Prepaid Advertising AnswerIncreaseDecrease Answer Accounts Payable AnswerIncreaseDecrease Answer Interest Payable AnswerIncreaseDecrease Answer Cash Flow Used by Operating Activities Answer Cash Flow from Investing Activities Sale of Land Answer Purchase of Plant Assets Answer Cash Used by Investing Activities Answer Cash Flow from Financing Activities Issuance of Bonds Payable Answer Purchase of Treasury Stock Answer Cash Provided by Financing Activities Answer Net Change in Cash Answer Cash at Beginning of Year Answer Cash at End of Year Answer

Statement of Cash Flows (Indirect Method) Arctic Company's income statement and comparative balance sheets as of December 31 of 2013 and 2012 follow: ARCTIC COMPANY Income Statement For the Year Ended December 31, 2013 Sales Revenue $946,400 Cost of Goods Sold $694,200 Wages Expense 247,000 Advertising Expense 40,300 Depreciation Expense 28,600 Interest Expense 23,400 Gain on Sale of Land (32,500) 1,001,000 Net Loss $(54,600) ARCTIC COMPANY Balance Sheets Dec. 31, 2013 Dec. 31, 2012 Assets Cash $63,700 $36,400 Accounts Receivable 54,600 65,000 Inventory 139,100 146,900 Prepaid Advertising 13,000 16,900 Plant Assets 468,000 288,600 Accumulated Depreciation (101,400) (72,800) Total Assets $637,000 $481,000 Liabilities and Stockholders' Equity Accounts Payable $22,100 $40,300 Interest Payable 7,800 - Bonds Payable 260,000 - Common Stock 318,500 318,500 Retained Earnings 67,600 122,200 Treasury Stock (39,000) - Total Liabilities and Stockholders' Equity $637,000 $481,000 During 2013, Arctic sold land for $91,000 cash that had originally cost $58,500. 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 2013. b. Prepare a statement of cash flows using the indirect method. a. Change in Cash during 2013 $Answer AnswerIncreaseDecrease b. Use a negative sign with cash outflow answers. ARTIC COMPANY Statement of Cash Flows For Year Ended December 31, 2013 Cash Flow from Operating Activities Net Loss Answer Add (deduct) items to convert net income to cash basis Depreciation Answer Gain on Sale of Land Answer Accounts Receivable AnswerIncreaseDecrease Answer Inventory AnswerIncreaseDecrease Answer Prepaid Advertising AnswerIncreaseDecrease Answer Accounts Payable AnswerIncreaseDecrease Answer Interest Payable AnswerIncreaseDecrease Answer Cash Flow Used by Operating Activities Answer Cash Flow from Investing Activities Sale of Land Answer Purchase of Plant Assets Answer Cash Used by Investing Activities Answer Cash Flow from Financing Activities Issuance of Bonds Payable Answer Purchase of Treasury Stock Answer Cash Provided by Financing Activities Answer Net Change in Cash Answer Cash at Beginning of Year Answer Cash at End of Year Answer

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Statement of Cash Flows (Indirect Method)
Arctic Company's income statement and comparative balance sheets as of December 31 of 2013 and 2012 follow:

ARCTIC COMPANY Income Statement For the Year Ended December 31, 2013
Sales Revenue		$946,400
Cost of Goods Sold	$694,200
Wages Expense	247,000
Advertising Expense	40,300
Depreciation Expense	28,600
Interest Expense	23,400
Gain on Sale of Land	(32,500)	1,001,000
Net Loss		$(54,600)

ARCTIC COMPANY Balance Sheets
	Dec. 31, 2013	Dec. 31, 2012
Assets
Cash	$63,700	$36,400
Accounts Receivable	54,600	65,000
Inventory	139,100	146,900
Prepaid Advertising	13,000	16,900
Plant Assets	468,000	288,600
Accumulated Depreciation	(101,400)	(72,800)
Total Assets	$637,000	$481,000
Liabilities and Stockholders' Equity
Accounts Payable	$22,100	$40,300
Interest Payable	7,800	-
Bonds Payable	260,000	-
Common Stock	318,500	318,500
Retained Earnings	67,600	122,200
Treasury Stock	(39,000)	-
Total Liabilities and Stockholders' Equity	$637,000	$481,000

During 2013, Arctic sold land for $91,000 cash that had originally cost $58,500. 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 2013.
b. Prepare a statement of cash flows using the indirect method.

a. Change in Cash during 2013 $Answer AnswerIncreaseDecrease

b. Use a negative sign with cash outflow answers.

ARTIC COMPANY Statement of Cash Flows For Year Ended December 31, 2013
Cash Flow from Operating Activities
Net Loss		Answer
Add (deduct) items to convert net income to cash basis
Depreciation		Answer
Gain on Sale of Land		Answer
Accounts Receivable	AnswerIncreaseDecrease	Answer
Inventory	AnswerIncreaseDecrease	Answer
Prepaid Advertising	AnswerIncreaseDecrease	Answer
Accounts Payable	AnswerIncreaseDecrease	Answer
Interest Payable	AnswerIncreaseDecrease	Answer
Cash Flow Used by Operating Activities		Answer
Cash Flow from Investing Activities
Sale of Land		Answer
Purchase of Plant Assets		Answer
Cash Used by Investing Activities		Answer
Cash Flow from Financing Activities
Issuance of Bonds Payable		Answer
Purchase of Treasury Stock		Answer
Cash Provided by Financing Activities		Answer
Net Change in Cash	Answer
Cash at Beginning of Year		Answer
Cash at End of Year		Answer

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