Johnson Company Uses the Indirect Method to Prepare the Statement $\quad$

question 96

Essay

Johnson Company uses the indirect method to prepare the statement of cash flows. Refer to the following comparative balance sheet for Avatar Company and complete the third column for increases or decreases.
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ johrson Company
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Comparative Balance Sheet
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ December 31, 2014 and 2013
$\begin{array}{lrrc}\hline&2014&2013& \text { Increase/decrease } \\ \text { Cash } & \$ 39,600 & \$ 19,000 &\\\text { Accounts Receivable} & 24,400 & 38,500 & \\\text { Inventory} &\underline{204,000} &\underline{126,500} &\\\text {Total assets} & \underline{176,000}& \underline{184,800} & \\\hline\end{array}$ $\begin{array}{llcc} \text {Accounts Payable } & 4,800&6,600 \\ \text { Accrued Liabilities } &2,400&1,100\\ \text { Long-Term Notes Payable } &\underline{100,800}&\underline{99,000}\\ \text { Total liabilities } &\underline{108,000}&\underline{106,700}\\\end{array}$
$$\begin{array} { l l l } \text { Common Stock } & 36,000 & 2,200 \\\text { Retained Earnings } & 135,600 & 81,400 \\\text { Trez54ry Stock } & \underline{( 9,600 ) }& \underline{( 5,500 ) }\\\text { Total stockholders' equity } & \underline { 162,000 } & \underline { 78,100 }\end{array}$$ Total liabilities and
$\begin{array}{llcc} \text { stockholders' equity} & \underline{\$270,000} &\underline{\$184,800}\\\end{array}$

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