PR 16-2B Statement of cash flows-indirect method The comparative balance sheet of Beets Industries, Inc. at December 31, 2013 and 2012 is as follows: Assets Dec. 31, 2013 Dec. 31, 2012 Cash Accounts receivable (net). Inventories $ 379,920 570,240 761,040 $ 309,360 507,600 876,480 Prepaid expenses 27,120 21,600 Land 259,200 259,200 Buildings. 1,468,800 972,000 Accumulated depreciation-buildings.. (399,600) (355,320) Machinery and equipment... 669,600 669,600 Accumulated depreciation-machinery and equipment.. (183,600) (164,160) Patents. 91,680 103,680 $3,644,400 $3,200,040 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $ 717,840 $ 794,640 Dividends payable... Salaries payable... 28,080 67,680 21,600 74,640 Mortgage note payable, due 2017 192,000 0 Bonds payable. 0 336,000 Common stock, $2 par. 99,200 43,200 Paid-in capital in excess of par-common stock 388,000 108,000 Retained earnings.. 2,151,600 1,821,960 $3,644,400 $3,200,040 An examination of the income statement and the accounting records revealed the fol- lowing additional information applicable to 2013: a. Net income, $441,960. b. Depreciation expense reported on the income statement: buildings, $44,280; machinery and equipment, $19,440. c. Patent amortization reported on the income statement, $12,000. d. A building was constructed for $496,800. e. A mortgage note for $192,000 was issued for cash. f. 28,000 shares of common stock were issued at $12 in exchange for the bonds payable. g. Cash dividends declared, $112,320. Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Cash flows from operating activities: Net income BEETS INDUSTRIES, INC. Statement of Cash Flows For the Year Ended December 31, 2013 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Patent amortization Changes in current operating assets and liabilities: Increase in salaries payable Net Decrease in salaries payable Cash flows from investing activities: Net cash flow used for investing activities Cash flows from financing activities: Net cash flow provided by financing activities Increase (decrease) in cash Cash at the beginning of the year Cash at the end of the year Schedule of Noncash Financing and Investing Activities: Issuance of common stock to retire bonds Cash flows from operating activities: Net income BEETS INDUSTRIES, INC. Statement of Cash Flows For the Year Ended December 31, 2013 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Patent amortization Changes in current operating assets and liabilities: Increase in salaries payable Net cash flow from operating activities Cash flows from investing activities Cas Cash paid for construction of building Cash paid for dividends Cash received from issuance of mortgage note Net cash flow provided by financing activities Increase (decrease) in cash Cash at the beginning of the year Cash at the end of the year Schedule of Noncash Financing and Investing Activities: Issuance of common stock to retire bonds Cash flows from operating activities: Net income BEETS INDUSTRIES, INC. Statement of Cash Flows For the Year Ended December 31, 2013 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Patent amortization Changes in current operating assets and liabilities: Increase in salaries payable Net cash flow from operating activities Cash flows from investing activities: Net cash flow used for investing activities Cash flows from financing activities: Less cash paid for dividends Less cash paid for purchase of equipment Increase (decrease) in cash Cash at the beginning of the year Cash at the end of the year Schedule of Noncash Financing and Investing Activities: Issuance of common stock to retire bonds Cash flows from operating activities: Net income BEETS INDUSTRIES, INC. Statement of Cash Flows For the Year Ended December 31, 2013 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Patent amortization Changes in current operating assets and liabilities: Increase in salaries payable Net cash flow from operating activities Cash flows from investing activities: Net cash flow used for investing activities Cash flows from financing activities: Net cash flow provided by financing activities Increase (decrease) in cash Cash at the beginning of the year Cash at the end of the year Schedule of Noncash Financing and Investing Activities: Issuance of common stock to retire bonds