Preparing a Statement of Cash FlowsIndirect Method Sketchers Corporations recent comparative balance sheet and income statement follow.

Balance Sheet, December 31	Prior Year	Current Year
Assets
Cash and cash equivalents	$28,800	$122,400
Accounts receivable (net)	36,000	64,800
Inventory	72,000	86,400
Investment, long-term	14,400	-
Plant assets	216,000	338,400
Accumulated depreciation	(36,000)	(50,400)
Total assets	$331,200	$561,600
Liabilities and Stockholders' Equity
Accounts payable	$21,600	$36,000
Notes payable, short-term (nontrade)	28,800	21,600
Notes payable, long-term	72,000	129,600
Common stock, no-par	180,000	288,000
Retained earnings	28,800	86,400
Total liabilities and stockholders' equity	$331,200	$561,600

Income Statement, For
Year Ended, December 31	Current Year
Sales revenue	$1,080,000
Cost of goods sold	(648,000)
Gross margin	432,000
Depreciation expense	(14,400)
Other operating expenses	(230,400)
Net income	$187,200

Additional Information 1. Sold the long-term investment at cost, for cash. 2. Declared and paid a cash dividend of $50,400.

3. Purchased plant assets that cost $122,400; gave a $86,400 long-term note payable and paid $36,000 cash.

4. Paid a $28,800 long-term note payable by issuing common stock; fair value, $28,800. 5. Issued a stock dividend, $79,200.

Prepare the statement of cash flows for the current year ended December 31, assuming the indirect method is used in presenting cash flows from operating activities.

Note: Indicate a subtraction in the cash flow statement with a negative sign with the amount.

Statement of Cash Flows
For the Year Ended December 31
Cash flows from operating activities
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Adjustments:
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Cash flows from investing activities
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Cash flows from financing activities
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsale of long-term investment	Answer
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Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Noncash Disclosure
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer
Cash and cash equivalents, December 31Cash and cash equivalents, January 1Cash paid for dividendsChange in accounts payableChange in accounts receivable, netChange in inventoryDepreciation expenseExchanged plant assets for common stockExchanged plant assets for long-term note.Gain on sale of plant assetsIssuance of common stock for long-term note payment.Issuance of short-term note payableLoss on sale of plants assetsNet cash provided (used) by financing activitiesNet cash provided (used) by investing activitiesNet cash provided (used) by operating activitiesNet change in cash and cash equivalents during the yearNet incomePayment on short-term note payableProceeds from sale of plant assetsPurchase of long-term investmentsPurchase of plant assetsRetained earningsSale of long-term investment	Answer

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