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. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: Current Year Prior Year Balance Sheet at December 31 Cash Accounts Receivable Inventory Equipment Accumulated Depreciation-Equipment Total Assets Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings Total Liabilities and Stockholders' Equity Income Statement (current year) Sales Revenue Cost of Goods Sold Other Expenses Net Income $ 47,870 29,700 32,700 114,300 (37,800) $186, 770 $ 26, 800 770 41,000 84,500 33,700 $186,770 $ 19,500 32,000 39,000 105,000 (31,500) $164,000 $ 23,500 1,000 51,000 63,000 25,500 $164,000 $103,000 62,500 28,200 $ 12,300 Additional Data: a. Bought equipment for cash, $9,300. b. Paid $10,000 on the long-term note payable. c.Issued new shares of stock for $21,500 cash. d. Declared and paid a $4,100 cash dividend. e. Other expenses included depreciation, $6,300; salaries and wages, $10,300; taxes, $3,300; utilities, $8,300. 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 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) $ 12,300 HUNTER COMPANY Statement of Cash Flows For the Year Ended December 31 Cash Flows from Operating Activities: Net Income Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation Expense $ Decrease in Accounts Receivable Decrease in Inventory Increase in Accounts Payable Decrease in Salaries and Wages Payable 6,300 2,300 6,300 3,300 (230) 17,970 30,270 Net Cash Provided by Operating Activities Cash Flows from Investing Activities: Cash Payments to Purchase Equipment (9,300) (9,300) Net Cash Used in Investing Activities Cash Flows from Financing Activities: Cash Payments on Notes Payable (long-term) Cash Receipts from Issuing Stock Cash Payments for Dividends (10,000) 21,500 (4.100) 7,400 Net Cash Provided by Financing Activities Net Increase in Cash during the Year Cash Balance, January 1 Cash Balance, December 31 $ 0