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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:

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

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.

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.)

Explanation / Answer

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.)

HUNTER COMPANY Statement of Cash Flows For the Year Ended December 31, 2015 Cash Flows from Operating Activities: Net Income 12600 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 6600 Decrease account receivable 2600 Decrease Inventory 6600 Increase account payable 3600 Decrease salary and wages payable (260) Net cash flow from operating activities 31740 Cash Flows from Investing Activities: Equipment bought (9600) Net Cash Flows from Investing Activities: (9600) Cash Flows from Financing Activities: Loan repaid (10000) Issue common stock 23000 Dividend paid (4400) Net Cash Flows from Financing Activities: 8600 Net cash flow 30740 Beginning cash 21000 Ending cash 51740

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