The comparative balance sheet of Whitman Co. at December 31, 2014 and 2013, is as follows:

The comparative balance sheet of Whitman Co. at December 31, 2014 and 2013, is as follows:




Dec. 31, 2014 Dec. 31, 2013
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 918,000 $ 964,800
Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 828,900 761,940
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,268,460 1,162,980
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,340 35,100
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315,900 479,700
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,462,500 900,900
Accumulated depreciation—buildings . . . . . . . . . . . . . . . . . . . . . . . . . (408,600) (382,320)
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512,280 454,680
Accumulated depreciation—equipment . . . . . . . . . . . . . . . . . . . . . . . . (141,300) (158,760)
$4,785,480 $4,219,020
Liabilities and Stockholders’ Equity
Accounts payable (merchandise creditors) . . . . . . . . . . . . . . . . . . . . . . . $ 922,500 $ 958,320
Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,000 0
Common stock, $25 par . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317,000 117,000
Paid-in capital: Excess of issue price over par—common stock . . . . . 758,000 558,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,517,980 2,585,700
$4,785,480 $4,219,020


The noncurrent asset, noncurrent liability, and stockholders’ equity accounts for 2014 are as follows:





ACCOUNT Land ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
2014
Balance
Realized $151,200 cash
 from sale
1
20
Jan.
Apr.
479,700
163,800 315,900
ACCOUNT Buildings ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
2014
Balance
Acquired for cash
1
20
Jan.
Apr.
900,900
561,600 1,462,500

ACCOUNT Accumulated Depreciation––Buildings ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
2014
Balance
Depreciation for year
1
31
Jan.
Dec.
382,320
26,280 408,600
ACCOUNT Equipment ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
2014
Balance
Discarded, no salvage
Purchased for cash
1
26
11
Jan.
Aug.
454,680
407,880
512,280
46,800
104,400
ACCOUNT Accumulated Depreciation––Equipment ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
2014
Balance
Equipment discarded
Depreciation for year
1
26
31
Jan.
Dec.
158,760
111,960
29,340 141,300
46,800
ACCOUNT Bonds Payable ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
2014
May 1 Issued 20-year bonds 270,000 270,000
ACCOUNT Common Stock, $25 par ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
2014
Balance
Issued 8,000 shares of common
 stock for $50 per share
1
7
Jan.
Dec.
117,000
200,000 317,000
ACCOUNT Paid-In Capital in Excess of Par––Common Stock ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
2014
Balance
Issued 8,000 shares of common
 stock for $50 per share
1
7
Jan.
Dec.
558,000
200,000 758,000
ACCOUNT Retained Earnings ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
2014
Balance
Net loss
Cash dividends
1
31
31
Jan.
Dec.
2,585,700
2,550,380
2,517,980
35,320
32,400



Instructions

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.


Answer:




WHITMAN CO.
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities:
Net loss $ (35,320)
Adjustments to reconcile net loss to
net cash flow from operating activities:
Depreciation* 55,620
Loss on sale of land** 12,600
Changes in current operating assets
and liabilities:
Increase in accounts receivable (66,960)
Increase in inventories (105,480)
Decrease in prepaid expenses 5,760
Decrease in accounts payable (35,820)
Net cash flow used for operating activities $(169,600)
Cash flows from investing activities:
Cash received from land sold $151,200
Less: Cash paid for acquisition
of building $561,600
Cash paid for purchase
of equipment 104,400 666,000
Net cash flow used for investing activities (514,800)
activities
Cash flows from financing activities:
Cash received from issuance of
bonds payable $270,000
Cash received from issuance of
common stock 400,000 $670,000
Less cash paid for dividends 32,400
Net cash flow from financing activities 637,600
Decrease in cash $ (46,800)
Cash at the beginning of the year 964,800
Cash at the end of the year $ 918,000
* $26,280 + $29,340
** $151,200 – $163,800
WHITMAN CO.
Spreadsheet (Work Sheet) for Statement of Cash Flows
For the Year Ended December 31, 2014
Account Title
Balance
Dec. 31, 2013
Transactions Balance
Debit Credit Dec. 31, 2014
Cash 964,800 (o) 46,800 918,000
Accounts receivable 761,940 (g) 66,960 828,900
Inventories 1,162,980 (h) 105,480 1,268,460
Prepaid expenses 35,100 (f) 5,760 29,340
Land 479,700 (l) 163,800 315,900
Buildings 900,900 (k) 561,600 1,462,500
Accum. depr.—buildings (382,320) (e) 26,280 (408,600)
Equipment 454,680 (i) 104,400 (j) 46,800 512,280
Accum. depr.—equipment (158,760) (j) 46,800 (d) 29,340 (141,300)
Accounts payable (958,320) (c) 35,820 (922,500)
Bonds payable 0 (m) 270,000 (270,000)
Common stock, $25 par (117,000) (n) 200,000 (317,000)
Paid-in capital in excess of
par—common stock (558,000) (n) 200,000 (758,000)
Retained earnings (2,585,700) (a) 35,320 (2,517,980)
(b) 32,400
Totals 0 988,780 988,780 0
Operating activities:
Net loss (a) 35,320
Depreciation—equipment (d) 29,340
Depreciation—buildings (e) 26,280
Loss on sale of land (l) 12,600
Increase in accts. receivable (g) 66,960
Increase in inventories (h) 105,480
Decrease in prepaid expenses (f) 5,760
Decrease in accounts payable (c) 35,820
Investing activities:
Purchase of equipment (i) 104,400
Acquisition of building (k) 561,600
Sale of land (l) 151,200
Financing activities:
Payment of cash dividends (b) 32,400
Issuance of bonds payable (m) 270,000
Issuance of common stock (n) 400,000
Net decrease in cash (o) 46,800
Totals 941,980 941,980