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Presented below is a condensed version of the comparative balance sheets for Son

ID: 2458508 • Letter: P

Question

Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31. 2012 2011

Cash                         $157,000      $78,000

Accounts receivable $180,000   $185,000

Investments              $52,000        $74,000

Equipment              $298,000     $240,000

Less: Accumulated depreciation—equipment $(106,000) $(89,000)

Current liabilities     $134,000      $151,000

Capital stock       $160,000          $160,000

Retained earnings    $287,000      $177,000


Additional information: Investments were sold at a loss (not extraordinary) of $7,000; no equipment was sold; cash dividends paid were $50,000; and net income was $160,000.

Prepare a statement of cash flows for 2012 for Sondergaard Corporation.

Explanation / Answer

Statement of cash flows:

Particulars

Amount ($)

Cash from operating Activities

Net profit

$160000

Add: Depreciation

          Loss on sale of investments

$17000

$7000

Cash Operating activities before working capital adjustments, and taxes

184000

Working Capital Adjustments

Add: Decrease in Debtors (185000-180000)

$5000

Add: Decrease in Current Liabilities (151000-134000)

-$17000

Cash from operating activities before taxes

172000

Less: Taxes

       -

Cash from operating activities

172000

Cash from investing activities

Add: Sale of Investments

$15000

Less: Purchase of Equipment

-$58000

Cash from Investing Activities

-$43000

Cash from financing Activities

Less: Dividend paid

-$50000

Cash from financing activities

-$50000

Net Increase / decrease in cash

$79000

Opening Cash Balance

$78000

Closing Cash Balance

$157000

Particulars

Amount ($)

Cash from operating Activities

Net profit

$160000

Add: Depreciation

          Loss on sale of investments

$17000

$7000

Cash Operating activities before working capital adjustments, and taxes

184000

Working Capital Adjustments

Add: Decrease in Debtors (185000-180000)

$5000

Add: Decrease in Current Liabilities (151000-134000)

-$17000

Cash from operating activities before taxes

172000

Less: Taxes

       -

Cash from operating activities

172000

Cash from investing activities

Add: Sale of Investments

$15000

Less: Purchase of Equipment

-$58000

Cash from Investing Activities

-$43000

Cash from financing Activities

Less: Dividend paid

-$50000

Cash from financing activities

-$50000

Net Increase / decrease in cash

$79000

Opening Cash Balance

$78000

Closing Cash Balance

$157000

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