17-16 CHAPTER 17 Statement of Cash Flows ACTION PLAN Determine net cash provided/used by operating activities by adjusting net income for items that did not affect cash. Determine net cash provided/used by investing activities and financing activities. Determine the net increase/decrease in cash. DO IT! 2b Indirect Method Use the following information to prepare a statement of cash flows using the indirect method Assets Reynolds Company Comparative Balance Sheets December 31 Change Increase/ Decrease $ 17,000 Increase 42,000 Increase 54,000 Increase 2022 2021 Cash $ 54,000 $37,000 Accounts receivable 68,000 26,000 Inventory 54.000 + Prepaid expenses 4,000 Land 45,000 70,000 6,000 25,000 Decrease 2000 Decrease Buildings Equipment Accumulated depreciation-buildings 200,000 200,000 (21,000) (11,000) 10,000 Increase 193,000 68,000 125,000 Increase Accumulated depreciation-equipment (28,000) (10,000) 18,000 Increase Totals $569,000 $386,000 Liabilities and Stockholders' Equity Accounts payable $23,000 $40,000 $ 17,000 Decrease Accrued expenses payable 10,000 -0- 10,000 Increase Bonds payable Common stock ($1 par) 110.000 150,000 40,000 Decrease 220,000 60,000 160,000 Increase Retained earnings 206,000 136,000 70,000 Increase Totals $569,000 $366.000 Reynolds Company Income Statement For the Year Ended December 31, 2022 Sales revenue $890,000 Cost of goods sold $465,000 Operating expenses 221,000 Interest expense 12,000 Loss on disposal of plant assets 2.000 700,000 Income before income taxes 190,000 65,000 Income tax expense Net income Additional information: 1. Operating expenses include depreciation expense e $23,000 for the equipment. 2. Land was sold at its book value for cash. $125,000 of $33,000, $10,000 for the building and 3. Cash dividends of $55.000 were declared and paid in 2022. 4. Equipment with a cost of $166,000 was purchased for cash. Equipment with a cost of $41,000 and a book value of $36,000 was sold for $34,000 cash. 5. Bonds of $40,000 were redeemed at their face value for cash. 6. Common stock ($1 par) was issued at par for $160,000 cash.