Statement of Cash Flows (Indirect Method) The Huber Company\'s income statement

Question

Statement of Cash Flows (Indirect Method)
The Huber Company's income statement and comparative balance sheets as of December 31 of 2013 and 2012 follow:

During 2013, $35,100 of cash dividends were declared and paid. A patent valued at $102,700 was obtained in exchange for land. Equipment that originally cost $26,000 and had $9,100 accumulated depreciation was sold for $16,900 cash. Bonds payable were sold for cash and cash was used to pay for structural improvements to the building.

Required
a. Compute the change in cash that occurred during 2013.
b. Prepare a statement of cash flows using the indirect method.

a. Change in Cash during 2013 $Answer AnswerIncreaseDecrease

b. Use a negative sign with cash outflow answers.

HUBER COMPANY
Income Statement
For the Year Ended December 31, 2013 Sales Revenue $1,040,000 Cost of Goods Sold $689,000 Wages and Other Operating Expenses 223,600 Depreciation Expense 35,100 Patent Amortization Expense 7,800 Interest Expense 23,400 Income Tax Expense 32,500 Gain on exchange of land for patent (46,800) 964,600 Net Income $75,400

Explanation / Answer

HUBER COMPANY Statement of Cash Flows For Year Ended December 31, 2013 Cash Flow from Operating Activities Net Income         75,400 Add (deduct) items to convert net income to cash basis Depreciation         35,100 Patent Amortization          7,800 Gain on Exchange of Land for Patent Retirement        -46,800 Accounts Receivable Increase        -19,500 Inventory Increase        -27,300 Accounts Payable Increase         13,000 Interest Payable Increase         10,400 Income Tax Payble Decrease         -6,500 Cash Flow Provided by Operating Activities         41,600 Cash Flow from Investing Activities Sale of Equipment         16,900 Improvements to Building *     -1,30,000 Cash Used by Investing Activities     -1,13,100 Cash Flow from Financing Activities Issuance of Bonds Payable      1,30,000 Payment of Dividends        -35,100 Cash Provided by Financing Activities         94,900 Net Decrease in Cash         23,400 Cash at Beginning of Year         20,800 Cash at End of Year         44,200 * Opening Book value of Building & Equipment        4,69,300 Less: Cost of Equipment sold            26,000        4,43,300 Ending Book value of Building & Equipment        5,73,300 Improvement to Building        1,30,000

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