Statement of Cash Flows (Indirect Method)

The Dairy Company's income statement and comparative balance sheets as of December 31 of 2013 and 2012 follow:

DAIRY COMPANY

Income Statement

For the Year Ended December 31, 2013

Sales Revenue $770,000

Cost of Goods Sold $484,000

Wages and Other Operating Expenses 104,500

Depreciation Expense 24,200

Goodwill Amortization Expense 7,700

Interest Expense 11,000

Income Tax Expense 39,600

Loss on Bond Retirement 5,500 676,500

Net Income $93,500

DAIRY COMPANY

Balance Sheets

Dec. 31, 2013Dec. 31, 2012

Assets

Cash $29,700 $19,800

Accounts Receivable 58,300 52,800

Inventory 113,300 119,900

Prepaid Expenses 13,200 11,000

Plant Assets 396,000 369,600

Accumulated Depreciation (95,700) (92,400)

Goodwill 47,300 55,000

Total Assets $562,100 $535,700

Liabilities and Stockholders' Equity

Accounts Payable $35,200 $28,600

Interest Payable 4,400 7,700

Income Tax Payable 6,600 8,800

Bonds Payable 66,000 132,000

Common Stock 277,200 250,800

Retained Earnings 172,700 107,800

Total Liabilities and

Stockholders' Equity $562,100 $535,700

During the year, the company sold for $18,700 cash old equipment that had cost $39,600 and had $20,900 accumulated depreciation.

New equipment worth $66,000 was acquired in exchange for $66,000 of bonds payable. Bonds payable of $132,000 were retired for cash at a loss.

A $28,600 cash dividend was declared and paid. All stock issuances were for cash.

Required

a. Compute the change in cash that occurred in 2013.

b. Prepare a statement of cash flows using the indirect method.

a. Change in Cash during 2013 $Answer Answer

b. Use a negative sign with cash outflow answers.

DAIRY COMPANY

Statement of Cash Flows

For Year Ended December 31, 2013

Cash Flow from Operating Activities

Net Income

Add (deduct) items to convert net income to cash basis

Depreciation

Goodwill Amortization

Loss on Bond Retirement

Accounts Receivable

Inventory

Prepaid Expenses

Accounts Payable

Interest Payable

Income Tax Payable

Cash Flow Provided by Operating Activities

Cash Flow from Investing Activities

Sale of Equipment

Cash Flow from Financing Activities

Retirement of Bonds Payable

Issuance of Common Stock

Payment of Dividends

Cash Used by Financing Activities

Net Change in Cash

Cash at Beginning of Year

Cash at End of Year