1. Partially Completed Spreadsheet

   Hanks Company has prepared the following changes in account balances for the spreadsheet to support its 2016 statement of cash flows:

   	A	B	C	D
   1
   2		Increase (Decrease)	Worksheet Entries
   3	Account Title		Debit	Credit
   4	Debits
   5	Cash	$830
   6	Noncash Accounts
   7	Accounts Receivable	(290)
   8	Inventory	1,280
   9	Investments	1,550
   10	Land	(700)
   11	Equipment	2,300
   12	Patents (net)	(100)
   13	Total	$4,870
   14	Credits
   15	Accumulated Depreciation	$350
   16	Accounts Payable	120
   17	Bonds Payable	2,000
   18	Premium on Bonds Payable	300
   19	Common Stock, $2 par	480
   20	Additional Paid-in Capital on
   21	Common Stock	1,120
   22	Retained Earnings	500
   23	Total	$4,870
   24

   Additional information: The net income was $1,300. Depreciation expense was $350, and patent amortization expense was $100. At the end of 2016, long-term investments were purchased at a cost of $1,550. Land that cost $700 was sold for $900. On December 31, 2016, bonds payable with a face value of $2,000 were issued for equipment valued at $2,300. Two hundred shares of common stock were issued at $7 per share. Forty shares of common stock were issued as a "small" stock dividend, the relevant market price being $5 per share. Cash dividends declared and paid totaled $600.

   Required

   On the basis of the preceding information, complete the spreadsheet. Use the indirect method for the operating section of the statement of cash flows.

   HANKS COMPANY
   Cash Flows Worksheet
   For Year Ended December 31, 2016
   	Change	Worksheet Entries Debit	Worksheet Entries Credit
   Debits
   Cash	830
   Noncash Accounts:
   Accounts Receivable	-290
   Inventory	1,280
   Investments	1,550
   Land	-700
   Equipment	2,300
   Patents (net)	-100
   Totals	4,870
   Credits
   Accumulated depreciation	350
   Accounts payable	120
   Bonds payable	2,000
   Premium on bonds payable	300
   Common stock, $2 par	480
   Additional Paid-in Capital on Common Stock	1,120
   Retained earnings	500
   Totals	4,870
   Cash Flows from Operating Activities:
   Net income
   Add: Depreciation expense
   Add: Patent amortization expense
   Add: Decrease in accounts receivable
   Add: Increase in accounts payable
   Less: Increase in inventory
   Less: Gain on sale of land
   Cash Flows From Investing Activities
   Payment for purchase of long-term investments
   Proceeds from sale of land
   Cash Flows From Financing Activities
   Payment of dividends
   Proceeds from issuance of common stock
   Investing and Financing Activities Not Affecting Cash
   Issuance of bonds for equipment
   Acquisition of equipment by issuance of bonds
   Net Increase in Cash
   Totals

   Feedback

   You should review the Comprehensive Example (Spreadsheet Method) in your text before you begin this exercise. This will provide both the necessary format for the spreadsheet and a detailed discussion of the various entries that are summarized below.

   To complete the spreadsheet you should use the following steps:

   1. Account for all the changes in the noncash accounts that occurred during the current period.
   2. Reconstruct the journal entries that caused the changes in the noncash accounts directly on the spreadsheet, in terms of the implied effects on cash inflows and outflows for operating, investing, and financing activities.
   3. Net income is adjusted on the spreadsheet to reconcile it to the net cash flow from operating activities.
   4. Account for the changes in the current asset and current liability accounts.
   5. Account for the changes in the noncurrent accounts. Review each noncurrent account and determine the entry responsible for its change.

Check My Work