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Statement of Cash FlowsIndirect Method

The following balances are available for Chrisman Company:

	December 31
	2017		2016
Cash	$7,300		$9,100
Accounts receivable	18,300		13,700
Inventory	14,500		24,200
Prepaid rent	8,200		5,500
Land	68,400		68,400
Plant and equipment	365,000		273,800
Accumulated depreciation	(59,300)		(27,400)
Totals	$422,400		$367,300
Accounts payable	$11,000		$9,100
Income taxes payable	2,700		4,600
Short-term notes payable	31,900		22,800
Bonds payable	68,000		91,000
Common stock	182,500		136,900
Retained earnings	126,300		102,900
Totals	$422,400		$367,300

Bonds were retired during 2017 at face value, plant and equipment were acquired for cash, and common stock was issued for cash. Depreciation expense for the year was $31,900. Net income was reported at $23,400.

Required:

1. Prepare a statement of cash flows for 2017 using the indirect method in the Operating Activities section. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash.

Chrisman Company Statement of Cash Flows For the Year Ended December 31, 2017

Cash Flows from Operating Activities
Cash collected from customersCash dividends paidIssuance of common stockNet incomeNet increase in cashRetained earningsNet income	$Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Acquisition of landAcquisition of plant and equipmentDepreciation expenseIssuance of bonds payableIssuance of short-term notes payableRetirement of bonds payableDepreciation expense	Depreciation expense
Acquisition of plant and equipmentDecrease in accounts payableDecrease in accounts receivableIncrease in accounts receivableIssuance of short-term notes payableRetirement of bonds payableIncrease in accounts receivable	Increase in accounts receivable
Acquisition of plant and equipmentDecrease in inventoryIncrease in income taxes payableIncrease in inventoryIssuance of short-term notes payableRetirement of bonds payableDecrease in inventory	Decrease in inventory
Acquisition of plant and equipmentDecrease in prepaid rentIncrease in landIncrease in prepaid rentIssuance of short-term notes payableRetirement of bonds payableIncrease in prepaid rent	Increase in prepaid rent
Acquisition of plant and equipmentDecrease in accounts payableDecrease in accounts receivableIncrease in accounts payableIssuance of short-term notes payableRetirement of bonds payableIncrease in accounts payable	Increase in accounts payable
Acquisition of plant and equipmentDecrease in accounts payableDecrease in income taxes payableIncrease in income taxes payableIssuance of short-term notes payableRetirement of bonds payableDecrease in income taxes payable	Decrease in income taxes payable
Net cash provided by operating activitiesNet cash used in operating activitiesNet cash provided by operating activities	$Net cash provided by operating activities
Cash Flows from Investing Activities
Acquisition of plant and equipmentDecrease in accounts payableDecrease in income taxes payableIncrease in income taxes payableIssuance of short-term notes payableRetirement of bonds payableAcquisition of plant and equipment	$Acquisition of plant and equipment
Cash Flows from Financing Activities
Acquisition of plant and equipmentDecrease in income taxes payableDecrease in inventoryIncrease in prepaid rentIssuance of bonds payableRetirement of bonds payableRetirement of bonds payable	$Retirement of bonds payable
Acquisition of plant and equipmentDecrease in inventoryDepreciation expenseIncrease in accounts payableIssuance of short-term notes payablePayment of short-term notes payableIssuance of short-term notes payable	Issuance of short-term notes payable
Acquisition of plant and equipmentDecrease in inventoryDepreciation expenseIncrease in accounts receivableIssuance of common stockPayment of cash dividendsIssuance of common stock	Issuance of common stock
Net cash provided by financing activitiesNet cash used in financing activitiesNet cash provided by financing activities	$Net cash provided by financing activities
Net decrease in cashNet increase in cashNet decrease in cash	$Net decrease in cash
Cash balance, December 31, 2016	fill in the blank 1c0d89fb1039f8d_29
Cash balance, December 31, 2017	$fill in the blank 1c0d89fb1039f8d_30

Feedback

Under the indirect method you must consider whether the increase or decrease in current assets (other than cash) and current liabilities are a source or use of cash. The sum of operating, investing, and financing activities must equal the net change in cash.

2. Based on its statement of cash flows, Chrisman

did not generate enough cash flow from its operating activities to fund its investing activities.generated more than enough cash flow from its operating activities to fund its investing activities.generated just enough cash flow from its operating activities to equal its investing activities.had a loss for the year and, therefore, it had negative cash flow.did not generate enough cash flow from its operating activities to fund its investing activities.

In addition to operating activities, Chrisman generated cash

by issuing a note as well as issuing common stock.from investing activities by selling old plant and equipment.by paying dividends to its stockholders.from depreciation.by issuing a note as well as issuing common stock.