A comparative balance sheet for Cate, Inc., on December 31, 2016 and 2015, follows. Additional information about the firm's financial activities during 2016 is also given below.

INSTRUCTIONS
Prepare a statement of cash flows for 2016. 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 $60,000 at par and received cash.
d. Received $20,000 in cash for the issue of an additional 2,000 shares of $10 par value common stock.
e. Purchased equipment for $60,000 in cash.
Analyze: Explain why an increase in accounts payable is considered an adjustment to cash flows from operating activities.

Cate, Inc Balance Sheet December 31, 2016 and 2015 2016 2015 2 5 9 31 6 47 6 600 3900 2610 3 5 806 4 40 Property, Plant, and Equipment otal Assets 3781 Liabilities and Stockholders Equity Liabilities Accounts Payable Bonds Payable 550 17000 250 0 1100 1870 Total Liabilities Common Stock, (51 par, 50,000 shares authorized, 6,000 shares issued in 2015 and 8,000 shares issued in 2016 Retained Earnings 800 2 1 10 011 2610 600 131 1 19 1 1 3781 Total Stockholders Equity Total Liabilities and Stockholders Equity