The following additional information is available about last year s activities:

Question

The following additional information is available about last year s activities: Net income for the year was$?. The company sold equipment during the year for $35,900 The equipment originally cost $161,000 and it had $126,400 in accumulated depreciation at the time of sale Cash dividends of $10,900 were declared and paid during the year. The beginning and ending balances in the Plant and Equipment and Accumulated Depreciation accounts are given below: The balance in the Cash account at the beginning of the year was $109,500; the balance at the end of the year was $ ?. If data are not given explaining the change in an account, make the most reasonable assumption as to the cause of the change. Using the indirect method, prepare a statement of cash flows for the year. (List any deduction in cash and

Explanation / Answer

Cash flows from operating activities Before konwing Net Income After Knowing Net Income Net income 0 86300 Adjustments for: Net cash provided from operating activities Depreciation (1052000-(986600-126400)) 191800 191800 Gain on sale of Equipment(35900-(161000-126400)) -1300 -1300 Increase in accounts receivables -170900 -170900 Decrease in inventories 63900 63900 Increase in Prepaid expenses -4100 -4100 Increase in Accounts Payable 49600 49600 Increase in Net Income Payable 9200 9200 Decrease in Accured payable -5000 -5000 Net cash from operating activities 133200 219500 0 Cash flows from investing activities 0 0 Purchase of Equipment (3192000-(2911000-161000)) -442000 -442000 Sale of Equipment 35900 35900 Increase in Long term Investment -99000 -99000 Decrease in Long term Loans to subsidaries 82000 82000 Net cash used in investing activities -423100 -423100 0 Cash flows from financing activities 0 Issue of Common Stock 125000 125000 Borrowings in Bonds payable 203000 203000 Payment of Dividend   -10900 -10900 Net cash used in financing activities 317100 317100 Net increase in cash and cash equivalents 27200 113500 Cash at beginning 109500 109500 Cash and cash equivalents at end of period 223000 For Assets Debit>Credit=Increase in asset Credit>Debit=Decrease in assets Foe Liabilities Debit>Credit=Decrease in Liabilities Credit>Debit=Increase in Liabilities Ans a Increase in Cash 113500 After all other adjustment increase in cash 27200 Net Income 86300 Ans e Net increase in cash and cash equivalents 113500 Cash at beginning 109500 Cash and cash equivalents at end of period 223000 Ans f The sales have made on account so there is increase in accounts Receivable so cash is not received for $170900 The inventory has been used in a proper manner so it has decreased The accounts payble will be paid in future which makes our liquidity better as there is increase in accounts payable The company has issued bonds and commom stock majorily because there has been investment in property Plant and equipment

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