The comparative balance sheet of Mills Engine Co. at December 31, 2014 and 2013, is as follows:

	Dec. 31, 2014			Dec. 31, 2013
Assets
Cash	$ 666,690			$ 718,340
Accounts receivable (net)	606,690			553,350
Inventories	920,030			846,700
Prepaid expenses	21,330			25,330
Land	229,340			346,680
Buildings	1,060,040			653,360
Accumulated depreciation-buildings	(300,010)			(280,010)
Equipment	373,350			330,010
Accumulated depreciation-equipment	(102,670)			(115,340)
	$3,474,790			$3,078,420
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors)	$ 660,210			$ 696,690
Bonds payable	194,590			0
Common stock, $20 par	229,000			85,000
Paid-in capital in excess of par-common stock	549,000			405,000
Retained earnings	1,841,990			1,891,730
	$3,474,790			$3,078,420

The noncurrent asset, noncurrent liability, and stockholders' equity accounts for 2014 are as follows:

ACCOUNT Land				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
2014
Jan. 1	Balance			346,680
Apr. 20	Realized $109,100 cash from sale		117,340	229,340

ACCOUNT Buildings				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
2014
Jan. 1	Balance			653,360
Apr. 20	Acquired for cash	406,680		1,060,040

ACCOUNT Accumulated Depreciation-Buildings				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
2014
Jan. 1	Balance				280,010
Dec. 31	Depreciation for year		20,000		300,010

ACCOUNT Equipment				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
2014
Jan. 1	Balance			330,010
Jan. 26	Discarded, no salvage		36,300	293,710
Aug. 11	Purchased for cash	79,640		373,350

ACCOUNT Accumulated Depreciation-Equipment				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
2014
Jan. 1	Balance				115,340
Jan. 26	Equipment discarded	36,300			79,040
Dec. 31	Depreciation for year		23,630		102,670

ACCOUNT Bonds Payable				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
2014
May 1	Issued 20-year bonds		194,590		194,590

ACCOUNT Common Stock, $20 par				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
2014
Jan. 1	Balance				85,000
Dec. 7	Issued 7,200 shares of common stock for $40 per share		144,000		229,000

ACCOUNT Paid-in Capital in Excess of Par-Common Stock				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
2014
Jan. 1	Balance				405,000
Dec. 7	Issued 7,200 shares of common stock for $40 per share		144,000		549,000

ACCOUNT Retained Earnings				ACCOUNT NO.
				Balance
Date	Item	Debit	Credit	Debit	Credit
2014
Jan. 1	Balance				1,891,730
Dec. 31	Net loss	23,950			1,867,780
Dec. 31	Cash dividends	25,790			1,841,990

Required:

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Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required.

Mills Engine Co.

Statement of Cash Flows

For the Year Ended December 31, 2014

Cash flows from operating activities:

• Depreciation
• Dividends
• Gain on sale of land
• Loss on sale of land
• Net loss
• Retained earnings

$

Adjustments to reconcile net loss to net cashflow from operating activities:

• Decrease in accounts receivable
• Depreciation
• Gain on sale of land
• Increase in accounts receivable
• Increase in bonds payable
• Increase in common stock

Correct 8

• Decrease in accounts receivable
• Decrease in inventories
• Gain on sale of land
• Increase in accounts payable
• Increase in prepaid expenses
• Loss on sale of land

Correct 10

Changes in current operating assets and liabilities:

• Decrease in accounts receivable
• Decrease in inventories
• Depreciation
• Increase in accounts receivable
• Increase in accumulated depreciation-buildings
• Increase in bonds payable

Correct 13

• Decrease in accounts receivable
• Decrease in bonds payable
• Decrease in inventories
• Increase in accounts payable
• Increase in inventories
• Increase in land

• Decrease in inventories
• Decrease in prepaid expenses
• Increase in accounts payable
• Increase in accumulated depreciation-equipment
• Increase in common stock
• Increase in prepaid expenses

• Decrease in accounts payable
• Decrease in inventories
• Increase in accounts payable
• Increase in paid-in capital in excess of par-common stock
• Net income
• Retained earnings

Net cash flow used for operating activities

$

Cash flows from investing activities:

• Cash received from customers
• Cash received from gain on sale of land
• Cash received from land sold
• Cash received from issuance of common stock
• Cash received from net income
• Cash received from retained earnings

$

• Less accumulated depreciation
• Less cash paid for acquisition of building
• Less cash paid for bonds payable
• Less cash paid for dividends
• Less depreciation
• Less loss on sale of land

$

• Less cash from issuance of bonds payable
• Less cash from issuance of common stock
• Less cash paid for purchase of equipment
• Less decrease in accounts receivable
• Less increase in accounts payable
• Less increase in inventories

Correct 29

Net cash flow used for investing activities

Cash flows from financing activities:

• Cash received from decrease in accounts receivable
• Cash received from decrease in prepaid expenses
• Cash received from issuance of bonds payable
• Cash received from purchase of building
• Cash received from purchase of equipment
• Cash received from sale of land

$

• Cash paid for accounts payable
• Cash paid for acquisition of building
• Cash paid for issuance of common stock
• Cash received from customers
• Cash received from issuance of common stock
• Cash received from sale of land

$

• Less cash from net loss
• Less cash paid for dividends
• Less cash paid for loss on sale of land
• Less cash paid for purchase of building
• Less cash paid for purchase of equipment
• Less cash paid for retained earnings

Net cash flow provided by financing activities

• Decrease in cash
• Increase in cash

$

Cash at beginning of the year

Cash at end of the year

$