11.

The following changes took place last year in Herald Companys balance sheet accounts:

Asset and Contra-Asset Accounts				Liabilities and Equity Accounts
Cash	$	44	I	Accounts payable	$	21	I
Accounts receivable	$	12	D	Accrued liabilities	$	10	D
Inventory	$	28	I	Income taxes payable	$	13	I
Prepaid expenses	$	5	D	Bonds payable	$	17	D
Long-term investments	$	28	D	Common stock	$	43	I
Property, plant, and equipment	$	148	I	Retained earnings	$	53	I
Accumulated depreciation	$	44	I

D = Decrease; I = Increase.

Long-term investments that had cost the company $51 were sold during the year for $46, and land that had cost $28 was sold for $74. In addition, the company declared and paid $33 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Herald did not issue any bonds during the year or repurchase any of its own stock.

The companys income statement for the year follows:

Sales			$	601
Cost of goods sold				249
Gross margin				352
Selling and administrative expenses				279
Net operating income				73
Nonoperating items:
Loss on sale of investments	$	(5)
Gain on sale of land		46		41
Income before taxes				114
Income taxes				28
Net income			$	86

The companys beginning cash balance was $104 and its ending balance was $148.

Required:

Use the direct method to convert the company's income statement to a cash basis. (Adjustment amounts that are to be deducted and Net cash "used in" operating activities should be indicated with a minus sign and all other amounts as positive values.)

Herald Companys Direct Method of Determining the Net Cash flows from Operating activities
Sales	$
Adjustments to a cash basis:
(Click to select)Increase in accrued liabilitiesDecrease in accounts payableIncrease in prepaid expensesDecrease in inventoryIncrease in accounts receivableDecrease in accrued liabilitiesLoss on sale of investmentsDecrease in prepaid expensesDepreciationIncrease in income taxes payableIncrease in inventoryIncrease in accounts payableGain on sale of landDecrease in income taxes payableDecrease in accounts receivable		$
Cost of goods sold
Adjustments to a cash basis:
(Click to select)Decrease in accrued liabilitiesIncrease in accounts receivableLoss on sale of investmentsDecrease in accounts receivableIncrease in inventoryDecrease in accounts payableIncrease in accounts payableDecrease in prepaid expensesDepreciationDecrease in inventoryGain on sale of landDecrease in income taxes payableIncrease in income taxes payableIncrease in prepaid expensesIncrease in accrued liabilities
(Click to select)Decrease in prepaid expensesDecrease in accounts payableDepreciationDecrease in inventoryDecrease in accounts receivableIncrease in accrued liabilitiesLoss on sale of investmentsIncrease in prepaid expensesDecrease in income taxes payableDecrease in accrued liabilitiesIncrease in income taxes payableIncrease in accounts payableIncrease in accounts receivableGain on sale of landIncrease in inventory
Selling and administrative expenses
Adjustments to a cash basis:
(Click to select)Decrease in accounts receivableIncrease in prepaid expensesLoss on sale of investmentsDecrease in inventoryDecrease in accounts payableIncrease in accounts payableDecrease in income taxes payableIncrease in income taxes payableIncrease in accounts receivableDecrease in accrued liabilitiesIncrease in inventoryGain on sale of landDecrease in prepaid expensesDepreciationIncrease in accrued liabilities
(Click to select)DepreciationIncrease in prepaid expensesIncrease in income taxes payableIncrease in accounts payableDecrease in accrued liabilitiesIncrease in inventoryIncrease in accrued liabilitiesDecrease in income taxes payableDecrease in prepaid expensesDecrease in accounts payableDecrease in inventoryDecrease in accounts receivableLoss on sale of investmentsIncrease in accounts receivableGain on sale of land
(Click to select)Decrease in accounts receivableDecrease in accrued liabilitiesGain on sale of landIncrease in prepaid expensesIncrease in accounts receivableDecrease in prepaid expensesLoss on sale of investmentsDecrease in inventoryDepreciationIncrease in accounts payableIncrease in accrued liabilitiesIncrease in inventoryDecrease in income taxes payableIncrease in income taxes payableDecrease in accounts payable
Income taxes
Adjustments to a cash basis:
(Click to select)Decrease in income taxes payableDecrease in accounts receivableIncrease in accounts receivableDecrease in accrued liabilitiesDecrease in prepaid expensesLoss on sale of investmentsGain on sale of landIncrease in income taxes payableDecrease in inventoryDecrease in accounts payableIncrease in accrued liabilitiesIncrease in inventoryIncrease in prepaid expensesIncrease in accounts payableDepreciation
Net cash (Click to select)provided byused for operating activities		$

The following changes took place last year in Herald Company's balance sheet accounts: Asset and Contra-Asset Accounts Liabilities and Equity Accounts Cash 44 Accounts payable 21 unts receivable 12 D Accrued liabilities 10 D nventory 28 Income taxes payable S 13 Bonds payable Prepaid expenses 17 D Long-term investments 28 D Common stock 43 Property, plant, and equipment S 148 Retained earnings 53 Accumulated depreciation 44 D 3 Decrease 3Increase. Long-term investments that had cost the company S51 were sold during the year for $46, and land that had cost $28 was sold for S74. In addition, the company declared and paid S33 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Herald did not issue any bonds during the year or repurchase any of its own stock. The company's income statement for the year follows: Sales $601 Cost of goods sold 249 Gross margin 352 Selling and administrative expenses 279 Net operating income 73 Non Loss on sale of investments (5 Gain on sale of land 48 41 ncome before taxes 114 ncome taxes 28 Net income 86 The company's beginning cash balance was S104 and its ending balance was S14B Required Use the direct method to convert the company's income statement to a cash basis. (Adjustment amounts that are to be deducted and Net cash "used in" operating activities should be indicated with a minus sign and all other amounts a positive values.) Herald Company' Direct Method of Determining the Net Cash flows from Operatin activities Sales Adjustments to a cash basis (Click to select) Cost of goods sold Adjustments to a cash basis: Click to select (Click to select) Selling and administrative expenses Adjustments to a cash basis: Click to select (Click to select) (Click to select) ncome taxes Adjustments to a cash basis Click to select Net cash (Click to select operating activities