Statement of Cash FlowsIndirect Method

The following balances are available for Chrisman Company: December 31 2017 2016 Cash $13,500 $16,900 Accounts receivable 33,800 25,300 Inventory 26,800 44,800 Prepaid rent 15,200 10,100 Land 126,600 126,600 Plant and equipment 675,000 506,300 Accumulated depreciation (109,700) (50,600) Totals $781,200 $679,400 Accounts payable $20,300 $16,900 Income taxes payable 5,100 8,400 Short-term notes payable 59,100 42,200 Bonds payable 127,000 169,000 Common stock 337,500 253,100 Retained earnings 232,200 189,800 Totals $781,200 $679,400 Bonds were retired during 2017 at face value, plant and equipment were acquired for cash, and common stock was issued for cash. Depreciation expense for the year was $59,100. Net income was reported at $42,400. 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. Chrisman Company Statement of Cash Flows For the Year Ended December 31, 2017 Cash Flows from Operating Activities Net income $ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense Increase in accounts receivable Decrease in inventory Increase in prepaid rent Increase in accounts payable Decrease in income taxes payable Net cash provided by operating activities $ Cash Flows from Investing Activities Acquisition of plant and equipment $ Cash Flows from Financing Activities Retirement of bonds payable $ Issuance of short-term notes payable Issuance of common stock Net cash provided by financing activities $ Net decrease in cash $ Cash balance, December 31, 2016 Cash balance, December 31, 2017 $ Feedback Under the indirect method you must consider whether the increase or decrease in current assets (other than cash) and current liabilities are a source or use of cash. The sum of operating, investing, and financing activities must equal the net change in cash. 2. Based on its statement of cash flows, Chrisman did not generate enough cash flow from its operating activities to fund its investing activities. In addition to operating activities, Chrisman generated cash by issuing a note as well as issuing common stock. Feedback Review investing activities and cash flow from operating activities. Feedback Partially correct Check My Work Previous