Statement of Cash FlowsIndirect Method

Peoria Corp. just completed another successful year, as indicated by the following income statement:

	For the Year Ended December 31, 2017

Sales revenue	$1,250,690
Cost of goods sold	700,900
Gross profit	$549,790
Operating expenses	151,220
Income before interest and taxes	$398,570
Interest expense	24,200
Income before taxes	$374,370
Income tax expense	149,748
Net income	$224,622

Presented here are comparative balance sheets:

	December 31
	2017		2016
Cash	$50,870		$88,830
Accounts receivable	179,040		130,200
Inventory	231,980		198,780
Prepayments	14,980		24,010
Total current assets	$476,870		$441,820
Land	$749,310		$601,060
Plant and equipment	700,860		498,270
Accumulated depreciation	(251,190)		(198,800)
Total long-term assets	$1,198,980		$900,530
Total assets	$1,675,850		$1,342,350
Accounts payable	$129,420		$146,870
Other accrued liabilities	67,450		62,080
Income taxes payable	88,780		108,990
Total current liabilities	$285,650		$317,940
Long-term bank loan payable	$349,570		$298,180
Common stock	$550,520		$403,500
Retained earnings	490,110		322,730
Total stockholders' equity	$1,040,630		$726,230
Total liabilities and stockholders' equity	$1,675,850		$1,342,350

Other information is as follows:

1. Dividends of $57,242 were declared and paid during the year.
2. Operating expenses include $52,390 of depreciation.
3. Land and plant and equipment were acquired for cash, and additional stock was issued for cash. Cash also was received from additional bank loans.

The president has asked you some questions about the year's results. She is very impressed with the profit margin of 17.96% (net income divided by sales revenue). She is bothered, however, by the decline in the company's cash balance during the year. One of the conditions of the existing bank loan is that the company maintain a minimum cash balance of $52,390.

Required:

1. Prepare a statement of cash flows for 2017 using the indirect method in the Operating Activities section. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash.

Peoria Corp. Statement of Cash Flows For the Year Ended December 31, 2017

Cash Flows from Operating Activities
Accounts receivableCash collected from customersCash dividends paidNet incomeNet increase in cashRetained earnings	$- Select -
Adjustments to reconcile net income to net cash provided by operating activities:
Acquisition of plant and equipmentAmortization expenseDecrease in accounts receivableDepreciation expenseIncrease in accumulated depreciationIssuance of common stock	- Select -
Acquisition of landAcquisition of plant and equipmentCash collected from customersCash dividends paidIncrease in accounts payableIncrease in accounts receivable	- Select -
Acquisition of landAcquisition of plant and equipmentCost of goods soldDecrease in inventoryIncrease in accounts payableIncrease in inventory	- Select -
Acquisition of landAcquisition of plant and equipmentCash dividends paidDecrease in inventoryDecrease in prepaymentsOperating expenses	- Select -
Acquisition of landAcquisition of plant and equipmentCash dividends paidDecrease in accounts payableDecrease in accrued liabilitiesIncrease in accounts payable	- Select -
Acquisition of landAcquisition of plant and equipmentCash dividends paidDecrease in inventoryIncrease in other accrued liabilitiesIncrease in prepayments	- Select -
Acquisition of landAcquisition of plant and equipmentCash dividends paidDecrease in accounts receivableDecrease in income taxes payableIncome tax expense	- Select -
Net cash provided by operating activitiesNet cash used by operating activities	$- Select -
Cash Flows from Investing Activities
Acquisition of landAdditional long-term borrowingsCash dividends paidDepreciation expenseIncrease in accumulated depreciationIssuance of common stock	$- Select -
Acquisition of plant and equipmentAdditional long-term borrowingsCash dividends paidDepreciation expenseIncrease in accumulated depreciationIssuance of common stock	- Select -
Net cash provided by investing activitiesNet cash used by investing activities	$- Select -
Cash Flows from Financing Activities
Acquisition of landAcquisition of plant and equipmentAdditional long-term borrowingsDepreciation expenseIncrease in income taxes payableInterest expense	$- Select -
Acquisition of landAcquisition of plant and equipmentCashDepreciation expenseIssuance of common stockRetained earnings	- Select -
Acquisition of landAcquisition of plant and equipmentCash dividends paidDecrease in prepaymentsInterest expenseRetained earnings	- Select -
Net cash provided by financing activitiesNet cash used by financing activities	$- Select -
Net decrease in cashNet increase in cash	$- Select -
Cash balance, December 31, 2016	fill in the blank 2c1a0305eff8fa2_35
Cash balance, December 31, 2017	$fill in the blank 2c1a0305eff8fa2_36

2. During the year Peoria experienced a decrease in cash at the end of the year due to

a reduction in inventory.an increase in accounts payable.collections on account of sales being less than sales for the year.issuance of common stock.