A comparative balance sheet for Graco, Inc., on December 31, 2019 and 2018, follows. Additional information about the firm€™s financial activities during 2019 is also given below.

INSTRUCTIONS
Prepare a statement of cash flows for 2019. Additional information for the year follows:
a. Had net income of $90,000.
b. Recorded $19,000 in depreciation.
c. Issued bonds payable with a par value of $50,000 at par and received cash.
d. Received $20,000 in cash for the issue of an additional 20,000 shares of $1 par value common stock.
e. Purchased equipment for $50,000 in cash.

Analyze: Explain why an increase in accounts payable is considered an adjustment to cash flows from operating activities.

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Graco, Inc. Comparative Balance Sheet December 31, 2019 and 2018 Assets 2019 2018 Cash 125900 73500 8 0600 4 4000 Accounts Receivable (Net) 13 1600 4 7600 250000 3 9 000 5 16100 Merchandise Inventory Property, Plant, and Equipment Less Accumulated Depreciation 2 00000 (2 000 0) 3 78100 Total Assets Liabilities and Stockholders' Equity Liabilities Accounts Payable 5 5000 160000 2 15000 기기01010 Bonds Payable 1 10000 187000 Total Liabilities Stockholders' Equity Common Stock, ($1 par, 50,000 shares authorized, 6,000 shares issued in 2018 and 8,000 shares issued in 2019) Retained Earnings 8 0 000 2 2 1100 30 1100 5 16 100 60000 131100 Total Stockholders' Equity 191100 3 78100 Total Liabilities and Stockholders' Equity