A comparative balance sheet for JB Corporation is presented below: JB CORPORATIO
ID: 2468334 • Letter: A
Question
A comparative balance sheet for JB Corporation is presented below:
JB CORPORATION Comparative Balance Sheet
2014 2013 Assets Cash $ 36,000 $ 31,000
Accounts receivable (net) 80,000 60,000
Prepaid insurance 25,000 17,000
Land 18,000 40,000
Equipment 70,000 60,000
Accumulated depreciation (20,000) (13,000)
Total Assets $209,000 $195,000
Liabilities and Stockholders' Equity
Accounts payable $ 11,000 $ 6,000
Bonds payable 27,000 19,000
Common stock 140,000 115,000
Retained earnings 31,000 55,000
Total liabilities and stockholders' equity $209,000 $195,000
Additional information: 1. Net loss for 2014 is $15,000 (includes $17,000 of depreciation expense and $7,000 loss on land sale). 2. Cash dividends of $9,000 were declared and paid in 2014. 3. Land was sold for cash at $15,000. This was the only land transaction during the year. 4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash. 5. $8,000 of bonds were issued during the year at face value 6. Equipment was acquired for common stock. The fair market value of the stock at the time of the exchange was $25,000.
Instructions Prepare a statement of cash flows for the year ended 2014, using the indirect method.
Explanation / Answer
Statement of Cash Flow Particulars Amount Total Amount Income (15,000.00) Loss on Sale of Land 7,000.00 Depreciation 17,000.00 Increase in AR (20,000.00) Increase In prepaid expenses (8,000.00) Increase in AP 5,000.00 Cash flow from operating activities (14,000.00) Cash flow from Investing activities Sale of Land 15,000.00 Sale of PPE 5,000.00 Cash flow from Investing activities 20,000.00 Cash flow from Financing activities Issue of Bonds 8,000.00 Dividends Paid (9,000.00) Cash flow from Financing activities (1,000.00) Opening cash and cash equivalents 31,000.00 Closing cash and cash equivalents 36,000.00
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