Avatar Company Uses the Indirect Method to Prepare Its Statement

question 126

Essay

Avatar Company uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet:

$\begin{array}{c} \text {Avatar Company}\\ \text {Comparative Balance Sheet}\\ \text {December 31, 2015 and 2014}\\\begin{array}{lll}\\\text {Cash}\\\text {Accounts Receivable}\\\text {Inventory}\\\text {PP\&E, net}\\\text {Total assets}\end{array}\begin{array}{c}\underline{2015} \\\$ 42,000 \\62,000 \\106,000 \\\underline{240,000} \\\underline{\underline{\$ 450,000 }}\\\end{array}\begin{array}{c}\underline{2014} \\\$ 36,000 \\70,000 \\50,000 \\\underline{180,000} \\\underline{\underline{\$ 336,000}} \\\end{array}\begin{array}{c}\underline{\text { Increase/decrease }}\\\$ 6,000 \\(8,000) \\56,000 \\\underline{60,000} \\\underline{\underline{\$ 114,000}} \end{array}\end{array}$

Additional information provided by the company includes the following:
Equipment costing $104,000 was purchased for cash.
Equipment with a net asset value of $20,000 was sold for $28,000.
Depreciation Expense of $24,000 was recorded during the year.
Prepare the investing activities section of the statement of cash flows.

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Definitions:

Lignin

A complex organic polymer found in the cell walls of many plants, making them rigid and woody and providing structural support.

Sclerenchyma

In plants, simple tissue composed of cells that die when mature; their tough walls structurally support plant parts. Includes fibers, sclereids.

Ground Tissue

A plant tissue system that makes up the bulk of most plants, involved in photosynthesis, storage, and support; includes parenchyma, collenchyma, and sclerenchyma cells.

Plant Body

The physical structure of a plant, including roots, stems, leaves, and reproductive structures, which function together in growth, reproduction, and survival.