BE23-3 Ryker Corporation is preparing its 2008 statement of cashflows, using the indirect method. Presented below is a list ofitems that may affect the statement. Using the code below, indicatehow each item will affect Ryker’s 2008 statement of cash flows.

Code Letter Effect
A Added to net income in the operating section
D Deducted from net income in the operating section
R-I Cash receipt in investing section
P-I Cash payment in investing section
R-F Cash receipt in financing section
P-F Cash payment in financing section
N Noncash investing and/or financing activity

Items
____ (a) Increase in accounts receivable. ____ (j) Increase inaccounts payable.
____ (b) Decrease in accounts receivable. ____ (k) Decrease inaccounts payable.
____ (c) Issuance of stock. ____ (l) Loan from bank by signingnote.
____ (d) Depreciation expense. ____ (m) Purchase of equipment usinga note.
____ (e) Sale of land at book value. ____ (n) Increase ininventory.
____ (f) Sale of land at a gain. ____ (o) Issuance of bonds.
____ (g) Payment of dividends. ____ (p) Retirement of bondspayable.
____ (h) Purchase of land and building. ____ (q) Sale of equipmentat a loss.
____ (i) Purchase of available-for-sale ____ (r) Purchase oftreasury stock.
investment.

E23-13 (SCF—Direct Method) Brecker Inc., a greeting card company,had the following statements
prepared as of December 31, 2008.

BRECKER INC.
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2008 AND 2007
12/31/08 12/31/07
Cash $ 6,000 $ 7,000
Accounts receivable 62,000 51,000
Short-term investments (Available-for-sale) 35,000 18,000
Inventories 40,000 60,000
Prepaid rent 5,000 4,000
Printing equipment 154,000 130,000
Accumulated depr.—equipment (35,000) (25,000)
Copyrights 46,000 50,000
Total assets $313,000 $295,000
Accounts payable $ 46,000 $ 40,000
Income taxes payable 4,000 6,000
Wages payable 8,000 4,000
Short-term loans payable 8,000 10,000
Long-term loans payable 60,000 69,000
Common stock, $10 par 100,000 100,000
Contributed capital, common stock 30,000 30,000
Retained earnings 57,000 36,000
Total liabilities & stockholders’ equity $313,000 $295,000

BRECKER INC.
INCOME STATEMENT
FOR THE YEAR ENDING DECEMBER 31, 2008
Sales $338,150
Cost of goods sold 175,000
Gross margin 163,150
Operating expenses 120,000
Operating income 43,150
Interest expense $11,400
Gain on sale of equipment 2,000 9,400
Income before tax 33,750
Income tax expense 6,750
Net income $ 27,000
Additional information:
1. Dividends in the amount of $6,000 were declared and paid during2008.
2. Depreciation expense and amortization expense are included inoperating expenses.
3. No unrealized gains or losses have occurred on the investmentsduring the year.
4. Equipment that had a cost of $20,000 and was 70% depreciated wassold during 2008.

Instructions
Prepare a statement of cash flows using the direct method. (Do notprepare a reconciliation schedule.)

E23-14 (SCF—Indirect Method) Data for Brecker Inc. are presented inE23-13.
Instructions
Prepare a statement of cash flows using the indirect method.

CA23-4 (Analysis of Transactions’ Effect on SCF) Each of thefollowing items must be considered in preparing a statement of cashflows for Sage Fashions Inc. for the year ended December 31,2008.
1. Fixed assets that had cost $20,000 61⁄2 years before and werebeing depreciated on a 10-year basis, with no estimated scrapvalue, were sold for $5,250.
2. During the year, goodwill of $15,000 was considered impaired andwas completely written off to expense.
3. During the year, 500 shares of common stock with a stated valueof $25 a share were issued for $34 a share.
4. The company sustained a net loss for the year of $2,100.Depreciation amounted to $2,000 and patent amortization was$400.
5. Uncollectible accounts receivable in the amount of $2,000 werewritten off against the Allowance for Doubtful Accounts.
6. Investments (available-for-sale) that cost $12,000 whenpurchased 4 years earlier were sold for $10,600. The loss wasconsidered ordinary.
7. Bonds payable with a par value of $24,000 on which there was anunamortized bond premium of $2,000 were redeemed at 103. The gainwas credited to ordinary income.

Instructions
For each item, state where it is to be shown in the statement andthen how you would present the necessary information, including theamount. Consider each item to be independent of the others. Assumethat correct entries were made for all transactions as they tookplace.

The company deposits $300,000 on December 31, 2007, which will earninterest at 10% compounded
quarterly, to help in the retirement of this debt. In addition, thecompany wants to know
how much should be deposited at the end of each quarter for 10years to ensure that $1,300,000
is available at the end of 2017. (The quarterly deposits will alsoearn at a rate of 10%, compounded
quarterly.) (Round to even dollars.)

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