13#2

Prepare statement of cash flows using the indirect method. The income statement for

2021

and the balance sheets for

2021

and

2020

are presented for

Hanover

Industries, Inc.

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Requirement

Prepare a statement of cash flows for

Hanover

Industries, Inc., for the year ended December 31,

2021,

using the indirect method.

Prepare the statement one section at a time. (Use parentheses or a minus sign for numbers to be subtracted and for net cash outflows.)

	Hanover Industries, Inc.
	Statement of Cash Flows (Indirect Method)
	For the Year Ended December 31, 2021
	Operating Activities:
	Adjustments to reconcile net income to cash basis:
	Net cash provided by (used for) operating activities

	Investing Activities:
	Net cash provided by (used for) investing activities

	Financing Activities:
	Net cash provided by (used for) financing activities

	Net increase (decrease) in cash
	Cash, beginning of the year
	Cash, end of the year

Income statement

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	A		B	C
1	Hanover Industries, Inc.
2	Income Statement
3	For the Year Ended December 31, 2021
4	Sales revenues			$952,000
5	Less: Cost of goods sold			377,000
6	Gross profit			$575,000
7	Less operating expenses:
8	Salaries and wages expense		$192,000
9	Insurance expense		13,000
10	Depreciation expense		51,200
11	Other operating expenses		81,000
12		Total operating expenses		337,200
13	Operating income			$237,800
14	Plus other income and less other expenses:
15	Interest expense		$5,600
16	Gain on sale of PP&E		3,000
17		Total other income and expenses		2,600
18	Income before income taxes			$235,200
19	Less: Income tax expense			70,560
20	Net income			$164,640

Balance sheets

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	A		B	C
1	Hanover Industries, Inc.
2	Comparative Balance Sheets
3	December 31, 2021 and 2020
4	Assets		2021	2020
5	Current assets:
6	Cash		$472,000	$287,000
7	Accounts receivable		73,000	129,000
8	Inventory		335,000	220,000
9	Prepaid insurance		7,500	5,000
10	Total current assets		$887,500	$641,000
11
12	Property, plant, and equipment		$610,000	$585,000
13	Less: Accumulated depreciation		(153,000)	(111,000)
14	Investments		91,000	71,000
15	Total assets		$1,435,500	$1,186,000
16
17	Liabilities
18	Current liabilities:
19	Accounts payable (inventory purchases)		$53,000	$31,000
20	Wages payable		16,600	17,600
21	Interest payable		1,800	400
22	Income taxes payable		61,560	11,500
23	Other accrued expenses payable		6,200	3,000
24	Total current liablities		$139,160	$63,500
25
26	Long-term liabilities		65,000	23,000
27	Total liabilities		$204,160	$86,500
28
29	Stockholders' equity
30	Common stock		$610,000	$610,000
31	Retained earnings		621,340	489,500
32	Total stockholders' equity		$1,231,340	$1,099,500
33
34	Total liabilities and equity		$1,435,500	$1,186,000