Preparing a Statement of Cash Flows (Indirect Method) Arctic Companys income statement and comparative balance sheets follow

ARCTIC COMPANY
Income Statement
For Year Ended December 31, Year 8
Sales		$582,400
Cost of goods sold	$427,200
Wages expense	152,000
Insurance expense	24,800
Depreciation expense	17,600
Interest expense	14,400
Gain on sale of land	(20,000)	616,000
Net income		$(33,600)

ARCTIC COMPANY
Balance Sheets
	Dec. 31 Year 8	Dec. 31 Year 7
Assets
Cash	$39,200	$22,400
Accounts receivable	33,600	40,000
Inventory	85,600	90,400
Prepaid advertising	8,000	10,400
Plant assets	288,000	177,600
Accumulated depreciation	(62,400)	(44,800)
Total assets	$392,000	$296,000
Liabilities and Stockholders' Equity
Accounts payable	$13,600	$24,800
Interest payable	4,800	-
Bonds payable	160,000	-
Common stock	196,000	196,000
Retained earnings	41,600	75,200
Treasury stock	(24,000)	-
Total liabilities and equity	$392,000	$296,000

During Year 8, Arctic sold land for $56,000 cash that had originally cost $36,000. Arctic also purchased equipment for cash, acquired treasury stock for cash, and issued bonds payable for cash in Year 8. Accounts payable relate to merchandise purchases.

a. Compute the change in cash that occurred during Year 8. $Answer b. Prepare a Year 8 statement of cash flows using the indirect method. Note: Use a negative sign when necessary.

Arctic Company
Statement of Cash Flows Year 8
Net Cash Flow from Operating Activities
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Add (Deduct) Items to Convert Net Loss to Cash Basis
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash Flows from Investing Activities
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash Flows from Financing Activities
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer
Cash at beginning of yearCash at end of yearChange in accounts payableChange in accounts receivableChange in interest payableChange in inventoryChange in prepaid advertisingDepreciationGain on sale of landIssuance of bonds payableIssuance of stockLoss on sale of landNet Cash Provided by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet change in cashNet incomePurchase of equipmentPurchase of treasury stockSale of equipmentSale of land	Answer

c. Compute Arctics (1) operating cash flow to current liabilities ratio, and (2) operating cash flow to capital expenditures ratio.

	Ratio	Numerator		Denominator		Result
	Operating cash flow to current liabilities	Answer		Answer	=
	Operating cash flow to capital expenditures	Answer		Answer	=

Does the company have sufficient cash flow to cover its current obligations? AnswerYesNo Does the company have sufficient cash flow to cover its capital expenditures? AnswerYesNo

Please answer all parts of the question.