Additional Problem 12 Sheridan Ltd., which follows ASPE, had the following compa

Question

Additional Problem 12 Sheridan Ltd., which follows ASPE, had the following comparative statement of financial position: Sheridan Ltd. Comparative Statement of Financial Position As at December 31 Assets 2018 2017 Cash $ 70,520 $ 43,000 Accounts receivable 116,960 87,720 Inventories 68,800 103,200 Prepaid insurance 8,600 6,880 Equipment 264,880 223,600 Accumulated depreciation-equipment (60,200 ) (43,000 ) Patents 68,800 86,000 Total assets $ 538,360 $ 507,400 Liabilities and Shareholders’ Equity Accounts payable $ 79,120 $ 68,800 Interest payable 6,880 10,320 Wages payable 13,760 6,880 Income taxes payable 13,760 17,200 Long-term note payable 103,200 118,680 Common shares 223,600 223,600 Retained earnings 98,040 61,920 Total liabilities and shareholders’ equity $ 538,360 $ 507,400 Additional information: 1. Net income for the fiscal year was $46,440. 2. Equipment that cost $34,400 and was 70% depreciated was sold during 2018, for a gain of $3,440. 3. No patents were purchased or sold during the fiscal year. Prepare the statement of cash flows using the indirect format. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Sheridan Ltd. Statement of Cash Flows $ Adjustments to reconcile net income to net cash provided by operating activities: $ $ $ $ $ $ $

Explanation / Answer

Prepare the statement of cash flows using the indirect format.

Cash flow from operating activities Net income 46440 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 41280 Amortization of patent 17200 Gain on sale of equipment -3440 Increase account receivable -29240 Decrease inventories 34400 Increase prepaid insurance -1720 Increase account payable 10320 Decrease interest payable -3440 Increase wages payable 6880 Decrease income tax payable -3440 68800 Net cash flow from operating activities 115240 Cash flow from investing activities Purchase of equipment -75680 Sale of equipment 13760 Net cash flow from investing activities -61920 Cash flow from financing activities Long term note repaid -15480 Dividend paid -10320 Net cash flow from financing activities -25800 Net cash flow 27520 Beginning cash 43000 Ending cash 70520

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.