The following financial statements and additional information are reported Compa

Question

The following financial statements and additional information are reported Comparative Balance Sheets June 30, 2817 and 2816 Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipnent Total assets $ 93,100 68,000 75,000 87,800 122,500 6,80810,208 288,780 275,708 148,800 139,800 101,000 (39,000) (21,000) $397,780 $393,780 Liabilities and Equity Accounts payable Wages payable Incone taxes payable Total current 1iabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings Total liabilities and equity $ 49,800 8,400 5,880 63, 200 54,8e8 66,080 19,800 8,600 94,400 84,000 117,280 178.4 268,808 184,00 1258 31,380 $397,700 $393, 788 12,5003 |KEBAN 1 Incone Statement For Year Ended June 38, 2017 Sales Cost of goods sold Gross profit Operating expenses $798,800 435,000 363,880 $82,600 91,000 Depreciation expense Other expenses Total operating expenses 173,600 189,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net incone 4,400 193,800 46,290 $147,510 Additional Information a. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $81,600 cash d. Received cash for the sale of equipment that had cost $72,600. yielding a $4.400 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement f. All purchases and sales of inventory are on credit

Explanation / Answer

Part I of the above question : Cash flow statement (Indirect Method)

Workiing Note:

Computation of Cash flow from sale of equipments:

     Amount in $ Cash flow from operating activities: Net loss as per income statement           1,93,800 Income statement items not affecting cash from operating activity Depreciation             82,600 Gain on sales on equipments (being investment activity)            -4,400 Changes in current operating assets and liabilities Account receivables            -26,000 Prepayments             34,700 Inventory              3,400 Accounts payables           -17,000 Wages payables           -11,400 Note payable retired during current year           -30,000 Net cash inflow from operating activities before tax          2,25,700 Less: Tax paid if any ( 8600+ 46290- 5800)           -49,090 Net cash inflow from operating activities after tax (A)         1,76,610 Cash flow from Invensting activities Sale proceeds from sale of equipments (Refer working note)            12,400 Purchase of new equipments           -81,600 Net cash outflow from investing activities (B)           -69,200 Cash flow from Financing activities Proceeds on issue of Common Stock (268000-184000)             84,000 Dividend paid during the year (31300+147510-12500)         -1,66,310 Net Cash outflow from financing activities ©         -82,310 Net increase in Cash (A+B+C)           25,100 Cash balance at prior year end           68,000 Cash balance at current year end           93,100

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