Question

Burns Corporation's net income last year was $97,400. Changes in the company's balance sheet accounts for the year appear below:

	Increases (Decreases)
Asset and Contra-Asset Accounts:
Cash and cash equivalents	$	18,800
Accounts receivable	$	13,800
Inventory	$	(17,600	)
Prepaid expenses	$	4,400
Long-term investments	$	10,900
Property, plant, and equipment	$	75,600
Accumulated depreciation	$	32,900
Liability and Equity Accounts:
Accounts payable	$	(18,700	)
Accrued liabilities	$	17,100
Income taxes payable	$	4,200
Bonds payable	$	(64,200	)
Common stock	$	41,600
Retained earnings	$	93,000

The company did not dispose of any property, plant, and equipment, sell any long-term investments, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $4,400.

Required:

a. Prepare the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.)

b. Prepare the investing activities section of the company's statement of cash flows for the year.

c. Prepare the financing activities section of the company's statement of cash flows for the year.

Answer 1

a.	Operating Activities
	Net income		$         97,400
	Adjustments
	Depreciation	$        32,900
	Increase in accounts receivable	$      (13,800)
	Decrease in Inventory	$        17,600
	Increase in prepaid expenses	$         (4,400)
	Decrease in accounts payable	$      (18,700)
	Increases in accrued liabilities	$        17,100
	Increase in income taxes payable	$          4,200	$         34,900
	Net cash provided by operating activities		$       132,300
b	Investing activities
	Purchase of long term investments	$      (10,900)
	Purchase of plant property and equipment	$      (75,600)
	Net cash used in investing activities	$      (86,500)
c	Financing activities
	Retirement of bonds payable	$      (64,200)
	Issuance of common stock	$        41,600
	Cash dividends	$         (4,400)
	Net cash used in financing activities	$      (27,000)