Statement of Cash Flows (Indirect Method) Arctic Company's income statement and comparative balance sheets as of December 31 of the current year and the previous year follow: ARCTIC COMPANY Income Statement For the Year Ended December 31 Sales Revenue $740,000 Cost of Goods Sold $534,000 Wages Expense 190,000 Advertising Expense 31,000 Depreciation Expense 24,000 Interest Expense 18,000 Gain on Sale of Land Net Loss (25,000) 772,000 $(32,000) Assets Cash Accounts Receivable Inventory Prepaid Advertising ARCTIC COMPANY Balance Sheets Dec. 31, Dec. 31, Plant Assets Accumulated Depreciation Total Assets Liabilities and Stockholders' Equity Accounts Payable Interest Payable Bonds Payable Common Stock Retained Earnings Treasury Stock Current Year Previous Year $71,000 $28,000 42,000 49,000 107,000 113,000 10,000 14,000 360,000 222,000 (80,000) (56,000) $510,000 $370,000 $17,000 $31,000 6,000 210,000 245,000 245,000 62,000 94,000 (30,000) Total Liabilities and Stockholders' Equity $510,000 $370,000 During the current year, Arctic sold land for $70,000 cash that had originally cost $45,000. Arctic also purchased equipment for cash, acquired treasury stock for cash, and issued bonds payable for cash. Accounts payable relate to merchandise purchases. Required a. Calculate the change in cash that occurred during the current year. b. Prepare a statement of cash flows using the indirect method. a. Change in Cash during the current year $ 43000 Increase b. Use a negative sign with cash outflow answers. ARTIC COMPANY Statement of Cash Flows For Year Ended December 31 Cash Flow from Operating Activities Net Loss Add (deduct) items to convert net income to cash basis Depreciation Gain on Sale of Land Accounts Receivable Inventory Prepaid Advertising Accounts Payable Interest Payable Cash Flow Used by Operating Activities Cash Flow from Investing Activities Sale of Land Purchase of Plant Assets Cash Used by Investing Activities Cash Flow from Financing Activities Issuance of Bonds Payable Purchase of Treasury Stock Cash Provided by Financing Activities Net Change in Cash Cash at Beginning of Year Cash at End of Year $ 747000 -24000 28000 $ 71000