Prepare a statment of cash flows using the indirect method.

Lunarica Corporation has the following comparative financial statement.

Lunarica Coporation

Comparative Balance Sheet

At December 31, 2011 and 2012

Assets 2011 2012

Cash $16,500 $27,000

Accounts Receivable 45,000 36,000

Inventory 9,000 18,000

Plant and equipment 60,000 60,000

Accumulated depreciation (12,000) (12,000)

Total Assets $118,500 $126,000

Liabilities and equity

Accounts Payable $19,200 $6,000

Common Stock 63,600 69,000

Retain Earnings 35,700 51,000

Total liabilities and equity $118,500 $126,000

Lunarica Corporation

Income Statement

For the Year Ended December 31, 2012

Sales $99,000

Less: Cost of good sold (58,500)

Gross Margin $40,500

Less: Operating expenses (19,500)

Net income $21,000

*Hint: In the problem below, this company does not have any cash flows from
investing activities for the current year. Dividends of $5,700 were paid. No equipment was purchased or retired during the current year.
Lunarica Corporation
Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities:
Net income
Add (deduct) adjusting items:
Decrease in accounts receivable
Increase in inventory
Decrease in accounts payable
Depreciation expense
Net cash from operating activities
Cash flows from financing activities:
Sale of common stock
Payment of dividends	$5,700
Net cash from financing activities
Net increase in cash