Problem 23-2

The comparative balance sheets for Hinckley Corporation show the following information.

		December 31
		2014		2013
Cash		$39,490		$14,430
Accounts receivable		18,440		11,870
Inventory		17,810		9,630
Investments		0		3,610
Buildings		0		30,270
Equipment		48,240		21,360
Patents		5,520		6,690
		$129,500		$97,860
Allowance for doubtful accounts		$3,170		$4,520
Accumulated depreciationequipment		2,770		4,730
Accumulated depreciationbuilding		0		6,300
Accounts payable		5,520		3,610
Dividends payable		0		4,200
Notes payable, short-term (nontrade)		2,400		3,680
Long-term notes payable		32,270		25,090
Common stock		43,910		33,050
Retained earnings		39,460		12,680
		$129,500		$97,860

Additional data related to 2014 are as follows.

1.		Equipment that had cost $11,750 and was 40% depreciated at time of disposal was sold for $3,680.
2.		$10,860 of the long-term note payable was paid by issuing common stock.
3.		Cash dividends paid were $4,200.
4.		On January 1, 2014, the building was completely destroyed by a flood. Insurance proceeds on the building were $31,600 (net of $3,990 taxes).
5.		Investments (available-for-sale) were sold at $1,600 above their cost. The company has made similar sales and investments in the past.
6.		Cash was paid for the acquisition of equipment.
7.		A long-term note for $18,040 was issued for the acquisition of equipment.
8.		Interest of $3,000 and income taxes of $8,320 were paid in cash.

Prepare a statement of cash flows using the indirect method. Flood damage is unusual and infrequent in that part of the country. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

HINCKLEY CORPORATION Statement of Cash Flows For the Year Ended December 31, 2014
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
Purchase of EquipmentSale of EquipmentGain from Flood DamageLoss from Flood DamageProceeds from Flood Damage to BuildingDepreciation ExpenseLoss on Sale of EquipmentPayment of DividendsPayment of Short-Term Note PayableDecrease in InventoryRetired Notes Payable by Issuing Common StockDecrease in Accounts Receivable (Net)Sale of InvestmentsPatent AmortizationGain on Sale of InvestmentsPurchased Equipment by Issuing Notes PayableLoss on Sale of InvestmentsNet IncomeIncrease in Accounts PayableGain on Sale of EquipmentDecrease in Accounts PayableIncrease in Accounts Receivable (Net)Increase in Inventory		$
Adjustments to reconcile net income to
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
Payment of Short-Term Note PayableIncrease in InventoryPurchase of EquipmentPatent AmortizationRetired Notes Payable by Issuing Common StockSale of EquipmentPurchased Equipment by Issuing Notes PayableDecrease in Accounts PayableCash Paid During the Year for InterestGain on Sale of InvestmentsIncrease in Accounts Receivable (Net)Decrease in InventoryLoss on Sale of InvestmentsDecrease in Accounts Receivable (Net)Sale of InvestmentsDepreciation ExpenseProceeds from Flood Damage to BuildingLoss on Sale of EquipmentGain on Sale of EquipmentCash Paid During the Year for Income TaxesIncrease in Accounts PayablePayment of DividendsNet IncomeGain from Flood DamageLoss from Flood Damage	$
Gain on Sale of InvestmentsIncrease in Accounts Receivable (Net)Loss on Sale of EquipmentLoss on Sale of InvestmentsPurchase of EquipmentPayment of DividendsGain on Sale of EquipmentPayment of Short-Term Note PayableNet IncomeSale of EquipmentLoss from Flood DamagePatent AmortizationIncrease in Accounts PayableGain from Flood DamageDecrease in Accounts Receivable (Net)Decrease in Accounts PayableIncrease in InventoryDepreciation ExpenseDecrease in InventorySale of InvestmentsProceeds from Flood Damage to BuildingRetired Notes Payable by Issuing Common StockPurchased Equipment by Issuing Notes PayableCash Paid During the Year for InterestCash Paid During the Year for Income Taxes
Purchase of EquipmentDecrease in InventoryLoss from Flood DamageIncrease in Accounts PayableCash Paid During the Year for InterestIncrease in Accounts Receivable (Net)Gain on Sale of InvestmentsDecrease in Accounts PayableDecrease in Accounts Receivable (Net)Sale of InvestmentsCash Paid During the Year for Income TaxesPatent AmortizationIncrease in InventoryRetired Notes Payable by Issuing Common StockNet IncomeLoss on Sale of EquipmentLoss on Sale of InvestmentsGain from Flood DamageGain on Sale of EquipmentSale of EquipmentProceeds from Flood Damage to BuildingDepreciation ExpensePayment of DividendsPayment of Short-Term Note PayablePurchased Equipment by Issuing Notes Payable
Purchase of EquipmentProceeds from Flood Damage to BuildingDepreciation ExpenseGain from Flood DamageDecrease in Accounts PayableLoss from Flood DamagePayment of DividendsGain on Sale of InvestmentsPayment of Short-Term Note PayableGain on Sale of EquipmentPatent AmortizationLoss on Sale of InvestmentsIncrease in Accounts Receivable (Net)Increase in Accounts PayableRetired Notes Payable by Issuing Common StockDecrease in Accounts Receivable (Net)Sale of InvestmentsDecrease in InventoryIncrease in InventoryCash Paid During the Year for Income TaxesSale of EquipmentPurchased Equipment by Issuing Notes PayableCash Paid During the Year for InterestNet IncomeLoss on Sale of Equipment
Retired Notes Payable by Issuing Common StockPurchased Equipment by Issuing Notes PayablePayment of DividendsLoss from Flood DamageSale of EquipmentDepreciation ExpenseSale of InvestmentsPatent AmortizationPayment of Short-Term Note PayableCash Paid During the Year for InterestCash Paid During the Year for Income TaxesIncrease in Accounts Receivable (Net)Purchase of EquipmentProceeds from Flood Damage to BuildingGain on Sale of InvestmentsNet IncomeLoss on Sale of EquipmentGain on Sale of EquipmentDecrease in Accounts Receivable (Net)Gain from Flood DamageIncrease in InventoryLoss on Sale of InvestmentsDecrease in InventoryIncrease in Accounts PayableDecrease in Accounts Payable
Patent AmortizationCash Paid During the Year for InterestPurchase of EquipmentDecrease in InventoryGain on Sale of InvestmentsNet IncomeIncrease in Accounts Receivable (Net)Loss on Sale of InvestmentsIncrease in Accounts PayableSale of InvestmentsLoss on Sale of EquipmentGain on Sale of EquipmentPayment of DividendsDecrease in Accounts PayableDecrease in Accounts Receivable (Net)Increase in InventorySale of EquipmentProceeds from Flood Damage to BuildingGain from Flood DamageRetired Notes Payable by Issuing Common StockPayment of Short-Term Note PayablePurchased Equipment by Issuing Notes PayableCash Paid During the Year for Income TaxesLoss from Flood DamageDepreciation Expense
Loss on Sale of InvestmentsPurchased Equipment by Issuing Notes PayableLoss on Sale of EquipmentIncrease in Accounts Receivable (Net)Gain on Sale of EquipmentCash Paid During the Year for Income TaxesNet IncomePurchase of EquipmentCash Paid During the Year for InterestGain from Flood DamageGain on Sale of InvestmentsPayment of Short-Term Note PayableSale of EquipmentDepreciation ExpensePayment of DividendsIncrease in Accounts PayableDecrease in Accounts PayablePatent AmortizationDecrease in Accounts Receivable (Net)Proceeds from Flood Damage to BuildingIncrease in InventoryDecrease in InventorySale of InvestmentsLoss from Flood DamageRetired Notes Payable by Issuing Common Stock
Cash Paid During the Year for Income TaxesDecrease in Accounts PayableRetired Notes Payable by Issuing Common StockDecrease in InventoryPayment of Short-Term Note PayableNet IncomeSale of InvestmentsDepreciation ExpenseDecrease in Accounts Receivable (Net)Purchased Equipment by Issuing Notes PayableIncrease in InventorySale of EquipmentPatent AmortizationPurchase of EquipmentLoss on Sale of EquipmentProceeds from Flood Damage to BuildingGain on Sale of EquipmentGain from Flood DamagePayment of DividendsCash Paid During the Year for InterestLoss from Flood DamageGain on Sale of InvestmentsLoss on Sale of InvestmentsIncrease in Accounts PayableIncrease in Accounts Receivable (Net)
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
Depreciation ExpenseNet IncomePayment of Short-Term Note PayablePurchase of EquipmentRetired Notes Payable by Issuing Common StockPatent AmortizationLoss on Sale of EquipmentSale of EquipmentDecrease in Accounts Receivable (Net)Gain on Sale of EquipmentLoss from Flood DamageCash Paid During the Year for Income TaxesDecrease in InventoryGain on Sale of InvestmentsIncrease in InventoryLoss on Sale of InvestmentsSale of InvestmentsProceeds from Flood Damage to BuildingIncrease in Accounts PayableDecrease in Accounts PayablePayment of DividendsIncrease in Accounts Receivable (Net)Purchased Equipment by Issuing Notes PayableGain from Flood DamageCash Paid During the Year for Interest
Increase in InventorySale of EquipmentNet IncomeRetired Notes Payable by Issuing Common StockDepreciation ExpensePurchase of EquipmentGain on Sale of EquipmentPayment of DividendsDecrease in InventoryPurchased Equipment by Issuing Notes PayableLoss on Sale of EquipmentSale of InvestmentsProceeds from Flood Damage to BuildingGain from Flood DamageDecrease in Accounts Receivable (Net)Payment of Short-Term Note PayableCash Paid During the Year for InterestCash Paid During the Year for Income TaxesPatent AmortizationLoss from Flood DamageGain on Sale of InvestmentsLoss on Sale of InvestmentsIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Accounts Receivable (Net)
Depreciation ExpenseCash Paid During the Year for Income TaxesPayment of Short-Term Note PayableSale of InvestmentsNet IncomeDecrease in InventoryPatent AmortizationPayment of DividendsGain on Sale of InvestmentsIncrease in Accounts Receivable (Net)Decrease in Accounts Receivable (Net)Loss on Sale of EquipmentLoss on Sale of InvestmentsGain on Sale of EquipmentGain from Flood DamageIncrease in InventoryIncrease in Accounts PayableDecrease in Accounts PayablePurchase of EquipmentLoss from Flood DamageSale of EquipmentRetired Notes Payable by Issuing Common StockProceeds from Flood Damage to BuildingPurchased Equipment by Issuing Notes PayableCash Paid During the Year for Interest
Net IncomeCash Paid During the Year for Income TaxesIncrease in Accounts PayableGain on Sale of InvestmentsDecrease in Accounts PayableLoss on Sale of InvestmentsGain from Flood DamageProceeds from Flood Damage to BuildingPatent AmortizationDecrease in InventoryLoss from Flood DamageRetired Notes Payable by Issuing Common StockSale of EquipmentIncrease in Accounts Receivable (Net)Sale of InvestmentsLoss on Sale of EquipmentPurchased Equipment by Issuing Notes PayablePayment of DividendsDepreciation ExpenseDecrease in Accounts Receivable (Net)Purchase of EquipmentIncrease in InventoryPayment of Short-Term Note PayableCash Paid During the Year for InterestGain on Sale of Equipment
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
Purchase of EquipmentSale of InvestmentsPatent AmortizationNet IncomePayment of DividendsDecrease in Accounts Receivable (Net)Cash Paid During the Year for InterestProceeds from Flood Damage to BuildingPayment of Short-Term Note PayableIncrease in Accounts Receivable (Net)Gain on Sale of InvestmentsLoss from Flood DamageCash Paid During the Year for Income TaxesLoss on Sale of EquipmentGain on Sale of EquipmentLoss on Sale of InvestmentsIncrease in InventoryIncrease in Accounts PayableDecrease in InventoryGain from Flood DamageDepreciation ExpenseRetired Notes Payable by Issuing Common StockDecrease in Accounts PayableSale of EquipmentPurchased Equipment by Issuing Notes Payable
Cash Paid During the Year for InterestRetired Notes Payable by Issuing Common StockGain on Sale of InvestmentsPurchased Equipment by Issuing Notes PayableProceeds from Flood Damage to BuildingGain from Flood DamageIncrease in InventorySale of EquipmentDecrease in InventoryCash Paid During the Year for Income TaxesNet IncomeSale of InvestmentsGain on Sale of EquipmentPurchase of EquipmentLoss from Flood DamageLoss on Sale of InvestmentsPayment of DividendsPayment of Short-Term Note PayableLoss on Sale of EquipmentDepreciation ExpensePatent AmortizationIncrease in Accounts PayableIncrease in Accounts Receivable (Net)Decrease in Accounts PayableDecrease in Accounts Receivable (Net)
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities		$
Supplemental disclosures of cash flow information:
Gain on Sale of InvestmentsCash Paid During the Year for Income TaxesGain from Flood DamageRetired Notes Payable by Issuing Common StockPayment of DividendsNet IncomePayment of Short-Term Note PayableIncrease in Accounts PayableSale of EquipmentPurchased Equipment by Issuing Notes PayableDecrease in InventoryCash Paid During the Year for InterestSale of InvestmentsLoss on Sale of EquipmentIncrease in InventoryGain on Sale of EquipmentLoss from Flood DamageDecrease in Accounts PayableIncrease in Accounts Receivable (Net)Depreciation ExpensePatent AmortizationPurchase of EquipmentLoss on Sale of InvestmentsDecrease in Accounts Receivable (Net)Proceeds from Flood Damage to Building		$
Depreciation ExpenseIncrease in InventoryPatent AmortizationSale of InvestmentsRetired Notes Payable by Issuing Common StockGain on Sale of InvestmentsPurchased Equipment by Issuing Notes PayableCash Paid During the Year for InterestCash Paid During the Year for Income TaxesIncrease in Accounts PayableDecrease in InventoryLoss on Sale of InvestmentsDecrease in Accounts Receivable (Net)Increase in Accounts Receivable (Net)Decrease in Accounts PayableSale of EquipmentNet IncomePurchase of EquipmentLoss on Sale of EquipmentProceeds from Flood Damage to BuildingPayment of DividendsGain on Sale of EquipmentGain from Flood DamagePayment of Short-Term Note PayableLoss from Flood Damage		$
Cash, January 1, 2014Cash, December 31, 2014Cash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
Net IncomeSale of InvestmentsLoss on Sale of EquipmentGain on Sale of InvestmentsPurchase of EquipmentGain on Sale of EquipmentDepreciation ExpenseIncrease in Accounts PayableSale of EquipmentGain from Flood DamageProceeds from Flood Damage to BuildingPatent AmortizationPayment of DividendsPurchased Equipment by Issuing Notes PayablePayment of Short-Term Note PayableCash Paid During the Year for Income TaxesCash Paid During the Year for InterestLoss on Sale of InvestmentsDecrease in Accounts PayableIncrease in Accounts Receivable (Net)Decrease in InventoryDecrease in Accounts Receivable (Net)Increase in InventoryRetired Notes Payable by Issuing Common StockLoss from Flood Damage		$
Net IncomePatent AmortizationDecrease in Accounts Receivable (Net)Payment of DividendsGain on Sale of EquipmentRetired Notes Payable by Issuing Common StockPurchased Equipment by Issuing Notes PayableLoss on Sale of EquipmentSale of InvestmentsDecrease in InventoryIncrease in InventoryGain from Flood DamageCash Paid During the Year for InterestCash Paid During the Year for Income TaxesPayment of Short-Term Note PayableSale of EquipmentLoss from Flood DamageDepreciation ExpenseGain on Sale of InvestmentsLoss on Sale of InvestmentsIncrease in Accounts PayablePurchase of EquipmentDecrease in Accounts PayableProceeds from Flood Damage to BuildingIncrease in Accounts Receivable (Net)
		$

Problem 23-2 The comparative balance sheets for Hinckley Corporation show the following information.