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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Definitions:

Meander

A winding curve or bend in a river, which occurs as the river erodes the landscape in sinuous patterns.

Flood

The result of water overfilling a channel and spilling out onto the floodplain or other adjacent land.

Hydrographs

Charts that show the flow rate of water over time at a specific point in a river or stream.

Peak Discharge

The maximum flow rate of water, such as within a stream or river, at a specific point following a storm or snowmelt.