CP12-3 Preparing a Statement of Cash Flows (Indirect Method) [LO 12-2, LO 12-3, LO 12-4, LO 12-5]

Hunter Company is developing its annual financial statements at December 31, 2015. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:

2015 2014 Balance Sheet at December 31 Cash $ 51,740 $ 21,000 Accounts Receivable 32,400 35,000 Inventory 35,400 42,000 Equipment 117,600 108,000 Accumulated DepreciationEquipment (39,600 ) (33,000 ) $ 197,540 $ 173,000 Accounts Payable $ 28,600 $ 25,000 Salaries and Wages Payable 740 1,000 Note Payable (long-term) 44,000 54,000 Common Stock 89,000 66,000 Retained Earnings 35,200 27,000 $ 197,540 $ 173,000 Income Statement for 2015 Sales Revenue $ 106,000 Cost of Goods Sold 64,000 Other Expenses 29,400 Net Income $ 12,600

Additional Data: a. Bought equipment for cash, $9,600. b. Paid $10,000 on the long-term note payable. c. Issued new shares of stock for $23,000 cash. d. Declared and paid a $4,400 cash dividend. e.

Other expenses included depreciation, $6,600; salaries and wages, $10,600; taxes, $3,600; utilities, $8,600.

f.

Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.

Required: 1.

Prepare the statement of cash flows for the year ended December 31, 2015, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)