I need help with how they go the answers to operating, investing, and financing
ID: 2336823 • Letter: I
Question
I need help with how they go the answers to operating, investing, and financing cash flows below, thanks.
Part V. Cash Flow Statement (14 points) Selected financial statement information and additional data for Ronis Co. is presented below. Use this information to answer the next (3) questions concerning in preparing a statement of cash flows for the year ending December 31, 2017.
December 31
2016 2017
Cash $60,000 $122,000
Accounts receivable (net) 67,000 100,000
Inventory 210,000 198,000
Land 350,000 300,000
Equipment 385,000 405,000
Accumulated depreciation (280,000) (260,000)
TOTAL $792,000 $865,000
Accounts payable 42,000 40,000
Bonds payable - long-term 225,000 260,000
Common stock 250,000 250,000
Retained earnings 275,000 315,000
TOTAL $792,000 $865,000
Additional data for 2017:
1. Net income was $70,000.
2. Depreciation was recorded for 2017.
3. Land was sold for $65,000 cash, and no land was purchased this year.
4. Equipment with an original cost of $100,000 and book value of $55,000 was sold for a loss of $5,000.
5. Dividends were declared and paid.
6. Equipment was purchased for cash.
7. A long-term bond was issued for cash.
Required: Using the above information, answer the following questions.
A. Cash Flow from Operations: $62,000
B. Cash Flow from Investing: ($5,000)
C. Cash Flow from Financing: $5,000
Explanation / Answer
Solution:
A. Cash flow from operations = $62,000
B. Cash flow from investing = ($5,000)
C. Cash flow from financing = $5,000
Ronis Co. Statement of Cash Flows For year ended December 31, 2017 Particulars Details Amount Cash Flow from Operating Activities: Net Income $70,000.00 Adjustments to reconcile net income to net cash provided by operations: Depreciation Expense ($260,000 + $45,000 - $280,000) $25,000.00 Gain on sale of Land ($65,000 - $50,000) -$15,000.00 Loss on sale of equipment $5,000.00 Increase in accounts receivables ($100,000 - $67,000) -$33,000.00 Decrease in inventory ($210,000 - $198,000) $12,000.00 Decrease in accounts payable ($42,000 - $40,000) -$2,000.00 Net Cash provided by operating activities $62,000.00 Cash Flow from Investing Activities: Purchase of Equipment ($405,000 + $100,000 - $385,000) -$120,000.00 Sale of land $65,000.00 Sale of equipment $50,000.00 Net Cash used in Investing activities -$5,000.00 Cash Flow from Financing Activities: Proceed from issue of bond ($260,000 - $225,000) $35,000.00 Dividend Paid ($275,000 + $70,000 - $315,000) -$30,000.00 Net Cash Provided by financing activities $5,000.00 Net Increase / (Decrease) in Cash $62,000.00 Cash balance at beginning of year $60,000.00 Cash balance at end of year $122,000.00Related Questions
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