PROBLEM 3-13 WORKING WITH A STATEMENT OF CASH FLOWS Prepare a statement of cash flows for Abrahams Manufacturing Company for the year ended January 31, 2018. Interpret your results. Additional Information 11. The only entry in the accumulated depreciation account is for 2018 depreciation. 2. The firm paid $22,000 in common stock dividends during 2018. Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy/paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function is to be used, the directions will specify the use of that function. Do not type in numerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest appearance of the data in your formulas, usually the Given Data section. DATA Abrahams Manufacturing Company Balance Sheet: Cash Accounts receivable Inventory Prepaid expenses Total current assets Gross plant and equipment Accumulated depreciation Total assets 2017 $89,000 64,000 112,000 10,000 275,000 238,000 (40,000) $473,000 2018 $100,000 70,000 100,000 10,000 280,000 311,000 (66,000) $525,000 Accounts payable Accrued liabilities Total current debt Mortgage payable Preferred stock Common stock Retained earnings Total debt and equity $85,000 68,000 153,000 70,000 0 205,000 45,000 $473,000 $90,000 63,000 153,000 0 120,000 205,000 47,000 $525,000 Abrahams Manufacturing Company Income Statement: Sales Cost of goods sold Gross profit Selling, general, and administrative expenses Depreciation expense Operating income Interest expens Earnings before taxes Taxes Preferred stock dividends Earnings available to common shareholders 2018 $184,000 60,000 $124,000 44,000 26,000 $54,000 4,000 $50,000 16,000 10,000 $24,000 Common stock dividends paid during 2018 $22,000 $34,000 SOLUTION Abrahams Manufacturing Company Statement of Cash Flows: Cash Flow from Operating Activities Net Income Adjustments Depreciation 26,000 Increase in accounts receivable (6,000) Decrease in inventory 12,000 Increase in account payable 5,000 Decrease in accrued liabilities (5,000) Net cash provided by operating activities Cash Flow from Investing Activities Increase in gross fixed assets Cash Flow from Financing Activities Decrease in mortgage payable (70,000) Increase in preferred stock 120,000 Preferred stock dividends 22,000 Common stock dividends 22,000 Net cash provided by financing activities Net increase in cash Beginning cash Ending cash