Question

Whispering Winds Corp. reported the following information for 2017. Whispering Winds Corp. Comparative Balance Sheets December 31 Assets 2017 2016 Change Increase/Decrease Cash $64,910 $35,830 $29,080 Increase Accounts receivable 61,840 21,790 40,050 Increase Inventory 44,310 –0– 44,310 Increase Prepaid expenses 5,990 4,010 1,980 Increase Land 54,840 69,610 14,770 Decrease Buildings 200,240 200,240 –0– Accumulated depreciation—buildings (20,910 ) (13,940 ) 6,970 Increase Equipment 181,480 67,820 113,660 Increase Accumulated depreciation—equipment (28,090 ) (10,020 ) 18,070 Increase Totals $564,610 $375,340 Liabilities and Stockholders’ Equity Accounts payable $42,910 $40,330 $2,580 Increase Accrued expenses payable 0 10,070 10,070 Decrease Bonds payable 100,900 150,710 49,810 Decrease Common stock ($1 par) 230,650 59,500 171,150 Increase Retained earnings 190,150 114,730 75,420 Increase Totals $564,610 $375,340 Whispering Winds Corp. Income Statement For the Year Ended December 31, 2017 Sales revenue $941,820 Cost of goods sold $472,100 Operating expenses 229,800 Interest expense 11,970 Loss on disposal of equipment 2,020 715,890 Income before income taxes 225,930 Income tax expense 64,830 Net income $161,100 Additional information: 1. Operating expenses include depreciation expense of $40,160. 2. Land was sold at its book value for cash. 3. Cash dividends of $85,680 were declared and paid in 2017. 4. Equipment with a cost of $164,450 was purchased for cash. Equipment with a cost of $50,790 and a book value of $35,670 was sold for $33,650 cash. 5. Bonds of $49,810 were redeemed at their face value for cash. 6. Common stock ($1 par) of $171,150 was issued for cash. Use this information to prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer:

Whispering Winds Corp.
Statement of Cash Flows (indirect method)
	Amount $	Amount $
Cash flows from operating activities:
Net income		161100
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation expense	40160
Loss on disposal of plant assets	2020
Increase in Accounts receivable	-40050
Increase in inventory	-44310
Increase in prepaid expanses	-1980
Increase in Accounts payable	2580
Decrease in Accrued expenses payable	-10070
		-51650
Net Cash flows from operating activities		109450
Cash flows from Investing activities:
Sale of equipment	33650
Purchase of equipment	-164450
Sale of Land	14770
Net Cash flows from Investing activities		-116030
Cash flows from Financing activities:
Redemption of dividend	-49810
Dividend Paid	-85680
Issue of common stock for cash	171150
Net Cash flows from Financing activities		35660
net changed in cash		29080
Add:Opeaning balance of cash		35830
Ending balance of cash		64910