Question

Condensed financial data of Sunland Company follow.

Sunland Company Comparative Balance Sheets December 31
Assets		2022			2021
Cash		$ 121,200			$ 72,600
Accounts receivable		131,700			57,000
Inventory		168,750			154,275
Prepaid expenses		42,600			39,000
Long-term investments		207,000			163,500
Plant assets		427,500			363,750
Accumulated depreciation		(75,000	)		(78,000	)
Total		$1,023,750			$772,125
Liabilities and Stockholders’ Equity
Accounts payable		$ 153,000			$ 100,950
Accrued expenses payable		24,750			31,500
Bonds payable		165,000			219,000
Common stock		330,000			262,500
Retained earnings		351,000			158,175
Total		$1,023,750			$772,125

Sunland Company Income Statement Data For the Year Ended December 31, 2022
Sales revenue				$582,690
Less:
Cost of goods sold		$203,190
Operating expenses, excluding depreciation		18,615
Depreciation expense		69,750
Income tax expense		40,920
Interest expense		7,095
Loss on disposal of plant assets		11,250		350,820
Net income				$ 231,870

Additional information:

1.		New plant assets costing $150,000 were purchased for cash during the year.
2.		Old plant assets having an original cost of $86,250 and accumulated depreciation of $72,750 were sold for $2,250 cash.
3.		Bonds payable matured and were paid off at face value for cash.
4.		A cash dividend of $39,045 was declared and paid during the year.

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

Statement of Cash Flows
For the Year Ended December 31, 2022
Cash Flows from Operating Activities:
Net income		231870
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	69750
Loss on disposal of plant assets	11250
Increase in Accounts receivable	-74700
Increase in inventory	-14475
Increase in Prepaid expenses	-3600
Increase in accounts payable	52050
Decrease in Accrued expenses payable	-6750
		33525
Net cash provided by operating activities		265395
Cash Flows from Investing Activities:
Purchase of Plant Assets	-150000
Sale of Plant Assets	2250
Purchase of Long-term investments	-43500
Net Cash used by Investing Activities		-191250
Cash Flows from Financing Activities
Payment of Cash Dividends	-39045
Redemption of Bonds Payable	-54000
Issuance of Common Stock	67500
Net Cash Used by Financing Activities		-25545
Net Increase in Cash		48600
Cash at Beginning of Period		72600
Cash at End of Period		121200