Statement of Cash Flows (Indirect Method) The Huber Company's income statement and comparative balance sheets as of December 31 of the current and previous year follow: HUBER COMPANY Income Statement For the Year Ended December 31 Sales Revenue $1,120,000 Cost of Goods Sold $742,000 Wages and Other Operating Expenses 240,800 Depreciation Expense 37,800 Patent Amortization Expense 8,400 Interest Expense 25,200 Income Tax Expense 35,000 Gain on exchange of land for patent (50,400) 1,038,800 Net Income $81,200 HUBER COMPANY Balance Sheets Dec. 31, Current Year Dec. 31, Previous Year Assets Cash $47,600 $22,400 Accounts Receivable 89,600 68,600 Inventory 119,000 89,600 Land 163,800 224,000 Building and Equipment 617,400 505,400 Accumulated Depreciation (168,000) (140,000) Patent 102,200 - Total Assets $694,000 $550,000 Liabilities and Stockholders' Equity Accounts Payable $50,400 $36,400 Interest Payable 18,200 7,000 Income Tax Payable 9,800 16,800 Bonds Payable 245,000 105,000 Common Stock 490,000 490,000 Retained Earnings 158,200 114,800 Total Liabilities and Stockholders' Equity $694,000 $550,000 During the current year, $37,800 of cash dividends were declared and paid. A patent valued at $110,600 was obtained in exchange for land. Equipment that originally cost $28,000 and had $9,800 accumulated depreciation was sold for $18,200 cash. Bonds payable were sold for cash and cash was used to pay for structural improvements to the building. Required a. Compute the change in cash that occurred during the current year. b. Prepare a statement of cash flows using the indirect method. a. Change in Cash during the current year $Answer Answer b. Use a negative sign with cash outflow answers. HUBER COMPANY Statement of Cash Flows For Year Ended December 31 Cash Flow from Operating Activities Net Income Answer Add (deduct) items to convert net income to cash basis Depreciation Answer Patent Amortization Answer Gain on Exchange of Land for Patent Answer Accounts Receivable Answer Answer Inventory Answer Answer Accounts Payable Answer Answer Interest Payable Answer Answer Income Tax Payable Answer Answer Cash Flow Provided by Operating Activities Answer Cash Flow from Investing Activities Sale of Equipment Answer Improvements to Building Answer Cash Used by Investing Activities Answer Cash Flow from Financing Activities Issuance of Bonds Payable Answer Payment of Dividends 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
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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Statement of Cash Flows (Indirect Method)
The Huber Company's income statement and comparative balance sheets as of December 31 of the current and previous year follow:

HUBER COMPANY
Income Statement
For the Year Ended December 31
Sales Revenue   $1,120,000
Cost of Goods Sold $742,000  
Wages and Other Operating Expenses 240,800  
Depreciation Expense 37,800  
Patent Amortization Expense 8,400  
Interest Expense 25,200  
Income Tax Expense 35,000  
Gain on exchange of land for patent (50,400) 1,038,800
Net Income   $81,200

 

HUBER COMPANY
Balance Sheets
  Dec. 31, Current Year Dec. 31, Previous Year
Assets    
Cash $47,600 $22,400
Accounts Receivable 89,600 68,600
Inventory 119,000 89,600
Land 163,800 224,000
Building and Equipment 617,400 505,400
Accumulated Depreciation (168,000) (140,000)
Patent 102,200 -
Total Assets $694,000 $550,000
Liabilities and Stockholders' Equity    
Accounts Payable $50,400 $36,400
Interest Payable 18,200 7,000
Income Tax Payable 9,800 16,800
Bonds Payable 245,000 105,000
Common Stock 490,000 490,000
Retained Earnings 158,200 114,800
Total Liabilities and Stockholders' Equity $694,000 $550,000


During the current year, $37,800 of cash dividends were declared and paid. A patent valued at $110,600 was obtained in exchange for land. Equipment that originally cost $28,000 and had $9,800 accumulated depreciation was sold for $18,200 cash. Bonds payable were sold for cash and cash was used to pay for structural improvements to the building.

Required
a. Compute the change in cash that occurred during the current year.
b. Prepare a statement of cash flows using the indirect method.

a. Change in Cash during the current year $Answer Answer


b. Use a negative sign with cash outflow answers.

HUBER COMPANY
Statement of Cash Flows
For Year Ended December 31
Cash Flow from Operating Activities
Net Income   Answer
Add (deduct) items to convert net income to cash basis
Depreciation   Answer
Patent Amortization   Answer
Gain on Exchange of Land for Patent Answer
Accounts Receivable Answer Answer
Inventory Answer Answer
Accounts Payable Answer Answer
Interest Payable Answer Answer
Income Tax Payable Answer Answer
Cash Flow Provided by Operating Activities   Answer
Cash Flow from Investing Activities
Sale of Equipment   Answer
Improvements to Building   Answer
Cash Used by Investing Activities   Answer
Cash Flow from Financing Activities
Issuance of Bonds Payable   Answer
Payment of Dividends   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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