Prepare statement of cash flows using the indirect method. The income statement for

2021

and the balance sheets for

2021

and

2020

are presented for

Harper

Industries, Inc.

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Requirement

Prepare a statement of cash flows for

Harper

Industries, Inc., for the year ended December 31,

2021,

using the indirect method.

Prepare the statement one section at a time. (Use parentheses or a minus sign for numbers to be subtracted and for net cash outflows.)

	Harper Industries, Inc.
	Statement of Cash Flows (Indirect Method)
	For the Year Ended December 31, 2021
	Operating Activities:
	Net income		$169,190
	Adjustments to reconcile net income to cash basis:
	Depreciation expense	$45,500
	Gain on sale of plant asset	2,000
	Net cash provided by (used for) operating activities

A

B

C

1

Harper Industries, Inc.

2

Income Statement

3

For the Year Ended December 31, 2021

4

Sales revenues

$957,000

5

Less: Cost of goods sold

382,000

6

Gross profit

$575,000

7

Less operating expenses:

8

Salaries and wages expense

$191,000

9

Insurance expense

10,500

10

Depreciation expense

45,500

11

Other operating expenses

83,000

12

Total operating expenses

330,000

13

Operating income

$245,000

14

Plus other income and less other expenses:

15

Interest expense

$5,300

16

Gain on sale of PP&E

2,000

17

Total other income and expenses

3,300

18

Income before income taxes

$241,700

19

Less: Income tax expense

72,510

20

Net income

$169,190

A

B

C

1

Harper Industries, Inc.

2

Comparative Balance Sheets

3

December 31, 2021 and 2020

4

Assets

2021

2020

5

Current assets:

6

Cash

$479,000

$288,000

7

Accounts receivable

79,000

121,000

8

Inventory

326,000

213,000

9

Prepaid insurance

9,500

5,000

10

Total current assets

$893,500

$627,000

11

12

Property, plant, and equipment

$590,000

$565,000

13

Less: Accumulated depreciation

(153,000)

(116,000)

14

Investments

88,000

72,000

15

Total assets

$1,418,500

$1,148,000

16

17

Liabilities

18

Current liabilities:

19

Accounts payable (inventory purchases)

$57,000

$34,000

20

Wages payable

16,400

17,600

21

Interest payable

1,800

300

22

Income taxes payable

63,510

12,000

23

Other accrued expenses payable

6,700

3,200

24

Total current liablities

$145,410

$67,100

25

26

Long-term liabilities

67,000

27,000

27

Total liabilities

$212,410

$94,100

28

29

Stockholders' equity

30

Common stock

$606,000

$606,000

31

Retained earnings

600,090

447,900

32

Total stockholders' equity

$1,206,090

$1,053,900

33

34

Total liabilities and equity

$1,418,500

$1,148,000

Additional information follows:

a.	Sold plant asset for $4,100. The original cost of this plant asset was $10,600 and it had $8,500 of accumulated depreciation associated with it.
b.	Paid $7,000 on the bonds payable; issued $47,000 of new bonds payable.
c.	Declared and paid cash dividends of $17,000.
d.	Purchased new investment for $16,000. Paid cash.
e.	Purchased new equipment for $35,600. Paid cash.