Question

PA12-3 Preparing a Statement of Cash Flows (Indirect Method) [LO 12-2, LO 12-3, LO 12-4, LO 12-5]

XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:

	Current Year			Previous Year
Balance Sheet at December 31
Cash	$	32,330		$	27,250
Accounts Receivable		33,400			27,200
Inventory		39,400			37,200
Equipment		109,000			92,000
Accumulated Depreciation—Equipment		(28,400	)		(24,200	)
Total Assets	$	185,730		$	159,450
Accounts Payable	$	34,400		$	26,200
Salaries and Wages Payable		1,130			1,250
Note Payable (long-term)		30,800			36,000
Common Stock		83,800			71,800
Retained Earnings		35,600			24,200
Total Liabilities and Stockholders’ Equity	$	185,730		$	159,450
Income Statement
Sales Revenue	$	112,000
Cost of Goods Sold		66,000
Other Expenses		34,600
Net Income	$	11,400

Additional Data:

1. Bought equipment for cash, $17,000.
2. Paid $5,200 on the long-term note payable.
3. Issued new shares of stock for $12,000 cash.
4. No dividends were declared or paid.
5. Other expenses included depreciation, $4,200; salaries and wages, $19,200; taxes, $5,200; utilities, $6,000.
6. 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 current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1