Chapter 16, Problem 16.2BPR

Statement of cash flows—indirect method

The comparative balance sheet of Harris Industries Inc. at December 31, 20Y4 and 20Y3, is as follows:

	Dec 31, 20Y4	Dec 31, 20Y3
Assets
Cash	$ 443,240	$ 360,920
Accounts receivable (net)	665,280	592,200
Inventories	887,880	1,022,560
Prepaid expenses	31,640	25,200
Land	302,400	302,400
Buildings	1,713,600	1,134,000
Accumulated depreciation—buildings	(466,200)	(414,540)
Machinery and equipment	781,200	781,200
Accumulated depreciation—machinery and equipment	(214,200)	(191,520)
Patents	106,960	112,000
Total assets	$4,251,800	$3,724,420
Liabilities and Stockholders' Equity
Accounts payable	$ 837,480	$ 927,080
Dividends payable	32,760	25,200
Salaries payable	78,960	87,080
Mortgage note payable, due in 10 years	224,000	0
Bonds payable	0	390,000
Common stock, $S par	200,400	50,400
Paid-in capital: Excess of issue price over par—common stock	366,000	126,000
Retained earnings	2,512,200	2,118,660
Total liabilities and stockholders' equity	$4,251,800	$3,724,420

An examination of the income statement and the accounting records revealed the following additional information applicable to 20Y4:

a. Net income, $524,580.

b. Depreciation expense reported on the income statement: buildings, $51,660; machinery and equipment, $22,680.

c. Patent amortization reported on the income statement, $5,040.

d. A building was constructed for $579,600.

e. A mortgage note for $224,000 was issued for cash.

f. 30.000 shares of common stock were issued at $13 in exchange for the bonds payable.

g. Cash dividends declared, $131,040.

Instructions

Prepare a statement of cash flows, using the indirect method.