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

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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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