Question

13-28  

Statement of cash flows—direct method (CMA adapted)

(LO 3, 4, 5, 7) Kate Petusky prepared Addison Controls' balance sheet and income statement for 2016. Before she could complete the statement of cash flows, she had to leave town to attend to a family emergency. Because the full set of statements must be provided to the auditors today, Addison's president, Lance Meyers, has asked you to prepare the statement of cash flows. Meyers has provided you with the balance sheet and income statement that Petusky prepared, as well as some notes she made:

Addison Controls Income Statement For the Year Ended December 31, 2016
Sales revenue		$127,900
Cost of goods sold		69,800
Gross margin		58,100
Selling expense	13,000
Administrative expense	8,000
Salaries expense	20,000
Depreciation expense	1,900
Interest expense	4,000	46,900
Income before gain and taxes		11,200
Gain on sale of land		900
Income tax expense		800
Net income		$ 11,300

Addison Controls Comparative Balance Sheets As of December 31
	2016	2015
Cash	$  5,100	$  4,300
Accounts receivable, net	6,300	5,500
Inventory	31,700	34,200
Total current assets	43,100	44,000
Property, plant, & equipment, net	211,500	215,300
Total assets	$254,600	$259,300
Accounts payable	$  3,400	$  5,900
Accrued expenses	600	700
Salaries payable	1,800	1,500
Taxes payable	2,100	2,600
Note payable	60,000	50,000
Total liabilities	67,900	60,700
Common stock	125,000	125,000
Retained earnings	61,700	73,600
Total stockholders' equity	186,700	198,600
Total liabilities & stockholders' equity	$254,600	$259,300

• •Equipment with an original cost of $35,000 was sold for $20,300. The book value of the equipment was $19,400.
• •On June 1, 2016, the company purchased new equipment for cash at a cost of $17,500.
• •At the end of the year, the company issued bonds payable for $10,000 cash. The bonds will mature on December 31, 2020.
• •The company paid $23,200 in cash dividends for the year.

Required

Using the direct method, prepare Addison Control's statement of cash flows for 2016.

Answer 1

The answer has been presented in the supporting sheets. All the parts has been solved with detailed explanation and format. For detailed answers refer to the supporting sheets.