Statement of Cash FlowsIndirect Method

The income statement for Quasar Enterprises for 2017 is as follows:

	For the Year Ended December 31, 2017

Sales revenue	$500,000
Cost of goods sold	400,000
Gross profit	$100,000
Operating expenses	180,000
Loss before interest and taxes	$(80,000)
Interest expense	28,000
Net loss	$(108,000)

Presented here are comparative balance sheets:

	December 31
	2017		2016
Cash	$95,000		$80,000
Accounts receivable	50,000		75,000
Inventory	100,000		150,000
Prepayments	55,000		45,000
Total current assets	$300,000		$350,000
Land	$475,000		$400,000
Plant and equipment	870,000		800,000
Accumulated depreciation	(370,000)		(300,000)
Total long-term assets	$975,000		$900,000
Total assets	$1,275,000		$1,250,000
Accounts payable	$125,000		$100,000
Other accrued liabilities	35,000		45,000
Interest payable	15,000		10,000
Total current liabilities	$175,000		$155,000
Long-term bank loan payable	$340,000		$250,000
Common stock	$450,000		$400,000
Retained earnings	310,000		445,000
Total stockholders' equity	$760,000		$845,000
Total liabilities and stockholders' equity	$1,275,000		$1,250,000

Other information is as follows:

1. Dividends of $27,000 were declared and paid during the year.
2. Operating expenses include $70,000 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. He is disturbed with the $108,000 net loss for the year. He notes, however, that the cash position at the end of the year is improved. He is confused about what appear to be conflicting signals: "How could we have possibly added to our bank accounts during such a terrible year of operations?"

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 net loss, cash payments, cash outflows, or decreases in cash.

Quasar Enterprises Statement of Cash Flows For The Year Ended December 31, 2017

Cash Flows from Operating Activities
Cash collected from customersCash dividends paidIssuance of common stockNet increase in cashNet lossRetained earningsNet loss	$Net loss
Adjustments to reconcile net income to net cash provided by operating activities:
Acquisition of plant and equipmentAdditional long-term borrowingsAmortization expenseDepreciation expenseIssuance of common stockNet increase in cashDepreciation expense	$Depreciation expense
Acquisition of landAcquisition of plant and equipmentCash dividends paidDecrease in accounts payableDecrease in accounts receivableIncrease in accounts receivableIncrease in accounts receivable	Increase in accounts receivable
Acquisition of landAcquisition of plant and equipmentCash dividends paidCost of goods soldDecrease in accounts payableDecrease in inventoryDecrease in accounts payable	Decrease in accounts payable
Acquisition of landAcquisition of plant and equipmentCash dividends paidDecrease in prepaymentsIncrease in prepaymentsOperating expensesIncrease in prepayments	Increase in prepayments
Acquisition of landAcquisition of plant and equipmentCash dividends paidIncrease in accounts payableIncrease in accounts receivableIncrease in inventoryIncrease in inventory	Increase in inventory
Acquisition of landAcquisition of plant and equipmentCash dividends paidDecrease in other accrued liabilitiesGross profitIncrease in other accrued liabilitiesDecrease in other accrued liabilities	Decrease in other accrued liabilities
Acquisition of landAcquisition of plant and equipmentCash dividends paidDecrease in interest payableIncrease in interest payableInterest expenseIncrease in interest payable	Increase in interest payable
Net cash provided by operating activitiesNet cash used by operating activitiesNet cash provided by operating activities	$Net cash provided by operating activities
Cash Flows from Investing Activities
Acquisition of landAdditional long-term borrowingsCash dividends paidDecrease in accounts receivableDepreciation expenseDisposal of assetsIssuance of common stockAdditional long-term borrowings	$Additional long-term borrowings
Acquisition of plant and equipmentAdditional long-term borrowingsDecrease in accounts receivableDepreciation expenseDisposal of assetsIssuance of common stockIssuance of common stock	Issuance of common stock
Net cash provided by investing activitiesNet cash used by investing activitiesNet cash provided by investing activities	$Net cash provided by investing activities
Cash Flows from Financing Activities
Acquisition of landAcquisition of plant and equipmentAdditional long-term borrowingsDecrease in inventoryDepreciation expenseInterest expense	$- Select -
Acquisition of landDecrease in inventoryDepreciation expenseIssuance of common stockNet lossRetained earnings	- Select -
Acquisition of landAcquisition of plant and equipmentCash dividends paidDecrease in inventoryDepreciation expenseIncrease in accounts payable	- 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 09a759f9c039ffa_35
Cash balance, December 31, 2017	$fill in the blank 09a759f9c039ffa_36