Accountants for Smithson, Inc. have assembled the following data for the year ended

December 31, 2016:

Prepare Smithson’s statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and financing activities.

SOLUTION

Cash Flows from Operating Activities:
Net Income		$ 69,500
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation Expense	$ 25,000
Gain on Sale of Building	(4,000)
Decrease in Accounts Receivable	6,000
Increase in Merchandise Inventory	(5,000)
Increase in Accounts Payable	1,900
Decrease in Income Tax Payable	(2,600)	21,300
Net Cash Provided by Operating Activities		90,800
Cash Flows from Investing Activities:
Acquisition of Equipment for Cash	(73,000)
Cash Receipt from Sale of Building	57,000
Net Cash Used for Investing Activities		(16,000)
Cash Flows from Financing Activities:
Cash Receipt from Issuance of Common Stock	42,000
Cash Receipt from Issuance of Notes Payable	60,000
Cash Payment of Notes Payable	(42,100)
Cash Payment of Dividends	(52,000)
Net Cash Provided by Financing Activities		7,900
Net Increase (Decrease) in Cash		82,700
Cash Balance, December 31, 2015		20,000
Cash Balance, December 31, 2016		$ 102,700

Non-cash Investing and Financing Activities:
Acquisition of Land by issuing Long-term Notes Payable		$ 118,000
Total Non-cash Investing and Financing Activities		$ 118,000