Note: The Statement of Cash Flows must be done using the Indirect Method using information derived from the prior sheets shown.

Preparing a Statement of Cash Flows Using the Direct Method using Excel's SUM Function and Multi- tab References Innovation Electronics, Inc. has provided you with the year end Income Statement Balance Sheet. The Controller has asked you to prepare the Statement of Cash Flows for the same year ended December 31. Use the information included in the Excel Simulation and the Excel functions described below to complete the task. Multi-Tab Cell Reference: Allows you to refer to data from another cell in a separate tab in the worksheet. When using the multi-tab cell reference, type the equal sign first, then click on the other tab and then click on the cell you want to reference. The syntax of a multi-tab cell reference looks different than a normal cell reference, since it includes the tab name surrounded by apostrophes and also an exclamation point before the cell location. From the Excel Simulation below, if in a blank cell on the Sheet1 tab "="Income Statement'!B15" was entered, the formula would output the result from cell B15 in the Balance Sheet tab, or 16,000 in this example. Basic Math functions: Allows you to use the basic math symbols to perform mathematical functions. You can use the following keys: + (plus sign to add), - (minus sign to subtract), * (asterisk sign to multiply), and / (forward slash to divide). From the Excel Simulation below on the Balance Sheet tab, if in a blank cell "=C15+C16" was entered, the formula would add the values from those cells and output the result, or 375,000 in this example. If using the other math symbols the result would output an appropriate answer for its function. SUM function: Allows you to refer to multiple cells and adds all the values. You can add individual cell references or ranges to utilize this function. From the Excel Simulation below on the Balance Sheet tab, if in a blank cell "=SUM(C10, C11,C12) was entered, the formula would output the result of adding those three separate cells, or 236,740 in this example. Similarly, if in a blank cell "=SUM(C10:C12) was entered, the formula would output the same result of adding those cells, except they are expressed as a range in the formula, and the result would be 236,740 in this example. Note: To complete the assignment, go to the worksheet tab labeled Cash Flow and complete the statement of cash flows. INNOVATION ELECTRONICS, INC. Income Statement For the Year Ended December 31, 20X2 Net sales $ 2,430,000 Gain on sale of land T T 6 ,500 Total revenues 2,436,500 $ Expenses: Cost of goods sold Operating expenses Depreciation expense Interest expense Income tax expense 1,565,000 598,000 16,000 17,000 63,000 Total expenses 2,259,000 Net income $ 177,500 Note: To complete the assignment, go to the worksheet tab labeled Cash Flow and complete the statement of cash flows. Note: Additional information is included at the bottom of the statement. INNOVATION ELECTRONICS, INC. Balance Sheet At December 31 20X2 2 0X1 Assets Current assets: Cash $ 184,420 $ 25,740 Accounts receivable 68,700 83,000 Inventory 134,500 128,000 Prepaid insurance 2,980 4,560 Long-term assets: Investments 211,000 120,000 Land 208,500 255,000 Equipment 203,000 203,000 Accumulated depreciation (117,500 (101,500) Total assets $ 895,600 $ 717,800 $ $ Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings 26,500 3,400 30,200 81,000 2,300 32,500 255,000 242,000 273.000 307,500 230,000 130,000 Total liabilities and stockholders' equity I$ 895.600 IS 717.800 Additional Information for 20X2: 1. Assume that all increases and decreases in long term assets, long term liabilities, and common stock are a result of cash transactions. 2. Land costing $46,500 was sold, resulting in a gain of $6,500. No other long-term assets were sold. 3. Additional long-term investments were purchased. 4. An additional long-term note payable was signed. No repayments on notes were made. 5. Additional common stock was issued. INNOVATION ELECTRONICS, INC. Statement of Cash Flows For the Year Ended December 31, 20X2 Cash Flows from Operating Activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense Gain (on sale of land) Changes in current assets and current liabilities: Accounts receivable Inventory Prepaid insurance Accounts payable Interest payable Income tax payable Net cash provided by used in) operating activities Cash Flows from Investing Activities: Purchase investments Sale of land Net cash provided by (used in) investing activities Cash Flows from Financing Activities: Issue common stock Issue long term note Net cash provided by used in financing activities Net increase (decrease) in cash Cash at beginning of the period Cash at end of the period