10.00 points The comparative balance sheets for 2016 and 2015 and the income sta
ID: 2490314 • Letter: 1
Question
10.00 points The comparative balance sheets for 2016 and 2015 and the income statement for 2016 are given below for Arduous Company. Additional information from Arduous's accounting records is provided also ARDUOUS COMPANY Comparative Balance Sheets December 31, 2016 and 2015 ($ in millions) 2016 2015 Assets $ 126 S 86 204 Accounts receivable Investment revenue receivable Inventory Prepaid insurance Long-term investment Land Buildings and equipment 195 12 213 10 172 206 205 18 130 155 410 (99) (130) 37 Less: Accumulated depreciation Patent $1,285 $1,124 Liabilities S 55 75 21 12 Bond interest payable Income tax payable Deferred income tax liability Notes payable Lease liability Bonds payable 9 17 21 19 13 87 220 285 (27) (30) Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital-excess of par Preferred stock Retained earnings 439 100 415 256 Less: Treasury stock $1,285 $1,124Explanation / Answer
Arduous Company All Amounts in $ millions Cash Flow Statement for the year ended 31 December 2016 (Using Indirect Method) Cash Flows from Operating Activities Net Income per Income Statement 90 Less : Income from Investment Revenue -12 Less : Gain on Sale of Treasury Bills -3 Add : Depreciation Expense 9 Add : Patent Amortization Expense 3 Add : Bond Interest Expense 33 Add : Loss on Machine Damage 28 Add : Income Tax Expense 41 99 Cash Flows before Working Capital Changes 189 Add : Decrease in Accounts Receivable 9 Less : Increase in Investment Revenue Receivable -3 Less : Increase in Inventory -8 Add : Decrease in Prepaid Expenses 8 Less : Decrease in Accounts Payable -20 Less : Decrease in Salaries Payable -9 Less : Increase in Deferred Income Tax Liability 8 Add : Increase in Bond Interest Payable 5 Less : Decrease in Income Tax Payable -2 -12 Cash Inflows from Operating Activities 177 Cash Flows from Investing Activities Purchase of Land -51 Purchase of Building on Lease -87 Purchase of Patents -1 Sale of Building 12 Purchase of Preferred Stock -30 Income on Preferred Stock added to cost -12 -169 Cash Flows from Financing Activities Repurchase of Common Stock as Treasury -14 Issue of 10% 4-year Note Payable 25 Bonds Retired at Maturity 65 Issue of Fresh Bonds -3 Issue of Stock Dividend -25.5 Dividend Declared and Paid -35.5 Issue of Common Stock 20 32 Net Cash Inflows for the year 40 Opening Cash and Cash Equivalents 86 Closing Cash and Cash Equivalents 126
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