E12-7 (Algo) Preparing and Evaluating a Simple Statement of Cash Flows (Indirect Method) [LO 12-1, LO 12-2, LO 12-5]

Suppose the income statement for Goggle Company reports $151 of net income, after deducting depreciation of $21. The company bought equipment costing $130 and obtained a long-term bank loan for $136. The companys comparative balance sheet, at December 31, is presented under Tab 1 below.

Required:

1. Calculate the change in each balance sheet account and indicate whether each account relates to operating, investing, and/or financing activities (+ for increase and for decrease).

(Select "NE" if there is no effect. Enter all amounts as positive values.)

	Previous Year	Current Year	Change		Type
Cash	49	348	????	$ ????	????????
Accounts Receivable	89	203
Inventory	330	149
Equipment	570	700
Accumulated DepreciationEquipment	(31)	(52)
Total	$1,007	$1,348
Salaries and Wages Payable	$24	$78
Notes Payable (long-term)	459	595
Common Stock	24	24
Retained Earnings	500	651
Total	$1,007	$1,348

Type Options:

• Cash
• Financing
• Investing
• Operating

Change Options:

• -
• +
• NE

2. Prepare a statement of cash flows using the indirect method.

(Amounts to be deducted should be indicated with a minus sign.)

GOGGLE COMPANY
Statement of Cash Flows
For the Year Ended December 31
Cash Flows from Operating Activities:	????????????
		??????????
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Changes in Current Assets and Current Liabilities:
Cash Flows from Investing Activities:
Cash Flows from Financing Activities:

6. Are the cash flows typical of a start-up, healthy, or troubled company?