Exercise 23-8

Sweet Co. reported $148,700 of net income for 2017. The accountant, in preparing the statement of cash flows, noted the following items occurring during 2017 that might affect cash flows from operating activities.

1.		Sweet purchased 100 shares of treasury stock at a cost of $20 per share. These shares were then resold at $25 per share.
2.		Sweet sold 100 shares of IBM common at $200 per share. The acquisition cost of these shares was $150 per share. There were no unrealized gains or losses recorded on this investment in 2017.
3.		Sweet revised its estimate for bad debts. Before 2017, Sweets bad debt expense was 1% of its net sales. In 2017, this percentage was increased to 2%. Net sales for 2017 were $461,900, and net accounts receivable decreased by $11,400 during 2017.
4.		Sweet issued 500 shares of its $10 par common stock for a patent. The market price of the shares on the date of the transaction was $23 per share.
5.		Depreciation expense is $40,300.
6.		Sweet Co. holds 40% of the Nirvana Companys common stock as a long-term investment. Nirvana Company reported $26,300 of net income for 2017.
7.		Nirvana Company paid a total of $2,100 of cash dividends to all investees in 2017.
8.		Sweet declared a 10% stock dividend. One thousand shares of $10 par common stock were distributed. The market price at date of issuance was $20 per share.

Prepare a schedule that shows the net cash flow from operating activities using the indirect method. Assume no items other than those listed above affected the computation of 2017 net cash flow from operating activities. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Sweet Co. Statement of Cash Flows (Partial) December 31, 2017For the Year Ended December 31, 2017For the Quarter Ended December 31, 2017
Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
Gain on Sale of InvestmentNet IncomeIncome from Equity Method InvestmentDividends from Equity Method InvestmentDepreciation expenseIncrease in Accounts ReceivableDecrease in Accounts ReceivableLoss on Sale of Investment		$
Adjustments to reconcile net income to
Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
Income from Equity Method Investment Dividends from Equity Method Investment Decrease in Accounts Receivable Increase in Accounts Receivable Net Income Depreciation expense Loss on Sale of Investment Gain on Sale of Investment	$
Loss on Sale of Investment Gain on Sale of Investment Depreciation expense Net Income Decrease in Accounts Receivable Dividends from Equity Method Investment Increase in Accounts Receivable Income from Equity Method Investment
Income from Equity Method Investment Gain on Sale of Investment Net Income Depreciation expense Loss on Sale of Investment Decrease in Accounts Receivable Dividends from Equity Method Investment Increase in Accounts Receivable
Dividends from Equity Method Investment Income from Equity Method Investment Decrease in Accounts Receivable Gain on Sale of Investment Increase in Accounts Receivable Net Income Loss on Sale of Investment Depreciation expense
Dividends from Equity Method Investment Loss on Sale of Investment Net Income Gain on Sale of Investment Income from Equity Method Investment Depreciation expense Increase in Accounts Receivable Decrease in Accounts Receivable
Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash		$