ate Petusky prepared Addison Controls’ balance sheet and income statement for 20

Question

ate Petusky prepared Addison Controls’ balance sheet and income statement for 2013. 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 sheets and income statement that Petusky prepared, as well as some notes she made:

Using the indirect method, prepare Addison Controls' statement of cash flows for 2013. (If an amount decreases cash flow then enter with a negative sign preceding the number or parenthesis, e.g. -15,000 or (15,000).)

Addison Control
Statement of Cash Flows
For the Year Ended December 31, 2013

Addison Controls
Income Statement
For the Year Ended December 31, 2013 Sales revenue $ 128,200 Cost of goods sold 70,270   Gross margin 57,930 Selling expense $13,060 Administrative expense 8,310 Salaries expense 20,210 Depreciation expense 1,900 Interest expense 4,220 47,700 Income before gain and taxes 10,230 Gain on sale of Land 900 Income tax expense 826   Net income $ 10,304

Explanation / Answer

Addison Control Cash Flow Statement For year ended 31 December 2013 Cash flows from operating activities Net Income $   10,304 Adjustment to reconcile net income to: Depreciation expense $      1,900 Gain on sale of land $       (900) Changes in current operating assets and liabilities Increase in accounts receivable $       (850) Decrease in inventory $      2,540 Decrease in accounts payable $   (2,400) Decrease in accrued expenses $         220 Decrease in taxes payable $       (760) $       (250) Net cash provided by operating activities $   10,054 Cash flows from investing activities Proceeds from sale of equipment $   20,650 Purchase of equipment $ (17,850) Net cash provided by investing activities $      2,800 Cash flows from financing activities Proceeds from issue of bonds $      9,710 Dividend paid $ (21,484) Net cash used by financing activities $ (11,774) Net increase in cash and cash equivalents $      1,080 Cash and cash equivalents at beginning of period $      4,290 Cash and cash equivalents at end of period $      5,370

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