|You have completed the field work in connection with your audit of Dunder Corpo

Question

|You have completed the field work in connection with your audit of Dunder Corporation for the year ended December 31, 2014. The balance sheet accounts at the beginning and end of the year are shown below: Cash Accounts Receivable Inventory Prepaid expenses Investment in subsidiary Cash surrender value of life insurance Land Buildings Equipment Patents Trademarks Bond discount and issue costs December 31, 2014 S99,435 $424,600 $635,740 $20,000 $200,000 $16,460 $100,000 $525,000 $381,000 $86,000 $25,000 $1,165 December 31, 2013 $110,700 $380,900 $576,475 $12,000 S0 $14,850 $100,000 $400,000 $290,000 $70,000 $35,000 $6,075 Total debits $2,514,400 $1,996,000 Accounts payable Income taxes payable Salaries and wages payable Allowance for doubtful accounts Accumulated depreciation - buildings Accumulated depreciation - equipment Long-term notes payable Bonds payable Premium on bonds payable Common stock Paid in capital in excess of par common stock Retained earnings $534,000 $68,000 $73,500 $25,000 $248,000 $160,000 $75,000 $400,000 $7,762 $150,000 $508,000 $34,500 $12,900 $23,000 $230,000 $103,000 $75,000 $300,000 S0 $125,000 $568,000 $205,138 $418,000 $166,600

Explanation / Answer

Cash flows from operating activities Net income $86,538 Adjustments for: Loss on sale of equipment 5600 Depreciation and amortization 12,600 Allowance for doubtful debt 2000 20,200 Increase in account receivable -43,700 increase in inventory -59,265 increase in prepaid expenses -8,000 Increase in account payable 26,000 Increase in Income tax payable 33,500 Increase in Salaries and wages payable 60,600 9,135 Cash generated from operations 115,873 Cash flows from investing activities Investment in subsidiaries -200000 Purchase of Building -125,000 Purchase of Equipment (91,000) Proceeds from sale of Equipment     15,000 Purchase of patent -31,000 Proceeds from trademarks 10,000 Net cash used in investing activities -422,000 Cash flows from financing activities Proceeds from issue of common stock 175,000 Procceds from bonds 167,862 Dividends paid -48,000 Net cash used in financing activities 294,862 Net increase in cash and cash equivalents -11,265 Cash and cash equivalents at beginning of period 110,700 Cash and cash equivalents at end of period $99,435

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