Question

Hunter Company is developing its annual financial statements at December 31, 2015. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: 2015 2014 Balance Sheet at December 31 Cash Accounts Receivable Inventory Equipment Accumulated Depreciation Equipment $ 52,030 33,300 36,300 118,700 (40,200) $ 21,500 36,000 43,000 109,000 (33,500) $200,130 $176,000 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings $ 29,200 730 44,000 90,500 35,700 $ 25,500 1,000 55,000 67,000 27,500 $200,130 $176,000 Income Statement for 2015 Sales Revenue Cost of Goods Sold Other Expenses $107,000 64,500 29,800 Net Income $ 12,700 Additional Data: a. Bought equipment for cash, $9,700. b. Paid $11,000 on the long-term note payable. c. Issued new shares of stock for $23,500 cash. d. Declared and paid a $4,500 cash dividend. e. Other expenses included depreciation, $6,700; salaries and wages, $10,700; taxes, $3,700; utilities, $8,700. f. Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash. Required: 1. Prepare the statement of cash flows for the year ended December 31, 2015, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

		Hunter Company
	Statement of Cash Flows
	for the year ended December 31,2015
Cash flows from Operating Activities
Net income for the year						12,700
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation expense					6,700
Decrease in Accounts receivable					2700
Decrease in inventory					6700
increase in accounts payable					3700
Decrease in Salaries and wages payable					-270	19,530
Net cash flow from operating activities						32,230
Cash flows from Investing Activities:
Cash paid form purchase of Equipment					-9,700
Net cash used by investing activities						-9,700
Cash flows from financing activities
cash paid on the long term note payable					-11,000
cash from common stock issue					23,500
Cash dividend paid					-4,500
net cash flow from financing activities						8,000
Net increase in cash						30,530
cash at the beginning of the year						21,500
cash at year end						52,030