E Busine Statement of Cash Flows (Indirect Method) The Dairy Company's income state comparative balance sheets as of December 31 of 2016 and 2015 follow: DAIRY COMPANY Income Statement For the Year Ended December 31, 2016 Sales Revenue $700,000 Cost of Goods Sold $460,000 Wages and Other Operating Expenses 95,000 Depreciation Expense 22,000 Goodwill Amortization Expense 7,000 Interest Expense 10,000 Income Tax Expense 36,000 Loss on Bond Retirement 5,000 635,000 Net Income $65,000 Assets Cash DAIRY COMPANY Balance Sheets Dec. 31, 2016 Dec. 31, 2015 $22,000 $18,000 42.000 28.000 income Tax Expense Loss on Bond Retirement Net Income Assets 36,000 5,000 635,000 DAIRY COMPANY Balance Sheets $65,000 Dec. 31, 2016 Dec. 31, 2015 Cash Accounts Receivable $22,000 $18,000 43,000 28,000 Inventory 103,000 129,000 Prepaid Expenses 12,000 10,000 Plant Assets 360,000 336,000 Accumulated Depreciation (87,000) (84,000) Goodwill 43,000 50,000 Total Assets $496,000 $487,000 Liabilities and Stockholders' Equity Accounts Payable $32,000 $26,000 Interest Payable 4,000 7,000 Assets Balance Sheets Dec. 31, 2016 Dec. 31, 2015 Cash Accounts Receivable $22,000 $18,000 43,000 28,000 Plant Assets Inventory Prepaid Expenses Accumulated Depreciation 103,000 129,000 12,000 10,000 360,000 336,000 (87,000) (84,000) Goodwill 43,000 50,000 Total Assets $496,000 $487,000 Liabilities and Stockholders' Equity Accounts Payable $32,000 $26,000 Interest Payable 4,000 7,000 Income Tax Payable 6,000 8,000 Bonds Payable 60,000 100,000 Common Stock 252,000 248,000 Retained Earnings 142,000 98,000 Total Liabilities and Stockholders' Equity $496,000 $487,000 During the year, the company sold for $17,000 cash old equipment that had cost $36,000 and had $19,000 accumulated depreciation. New equipment worth $60,000 was acquired in exchange for $60,000 of bonds payable. Bonds payable of $100,000 were retired for cash at a loss. A $21,000 cash dividend was declared and paid. All stock issuances were for cash. Required a. Compute the change in cash that occurred in 2016. eb flour using the indirect mathed During the year, the company sold for $17,000 cash old equipment that had cost $36,000 and had $19,000 accumulated depreciation. New equipment worth $60,000 was acquired in exchange for $60,000 of bonds payable. Bonds payable of $100,000 were retired for cash at a loss. A $21,000 cash dividend was declared and paid. All stock issuances were for cash. Required a. Compute the change in cash that occurred in 2016.. b. Prepare a statement of cash flows using the indirect method. a. Change in Cash during 2016 $ 0 x Increase 0 b. Use a negative sign with cash outflow answers. DAIRY COMPANY Statement of Cash Flows For Year Ended December 31, 2016 Cash Flow from Operating Activities Net Income Add (deduct) items to convert net income to cash basis Depreciation Goodwill Amortization $ 65,000 22,000 7,000 Loss on Bond Retirement 5,000- Accounts Receivable Increase O (15,000) Inventory Decrease Prepaid Expenses Increase = 26,000 (2,000) Accounts Payable Increase 6,000 Interest Payable Decrease (3.000) For Year Ended December 31, 2016 Cash Flow from Operating Activities Net Income Add (deduct) items to convert net income to cash basis Depreciation Goodwill Amortization Loss on Bond Retirement Accounts Receivable Inventory Prepaid Expenses Increase Accounts Payable Interest Payable Income Tax Payable Cash Flow Provided by Operating Activities Cash Flow from Investing Activities Sale of Equipment Cash Flow from Financing Activities Retirement of Bonds Payable Issuance of Common Stock Payment of Dividends Cash Used by Financing Activities NetChange in Cash Cash at Beginning of Year Cash at End of Year $ 65,000 22,000 7,000 5,000 (15,000) Decrease 26,000 Increase (2,000) Increase " Decrease Decrease O (2,000) 6,000- (3,000) $ 109,000 17,000 (105,000) 24,000 x (26,000) x (26,000) x (127,000) x 0 x 0x