Exercise 23-10 Following are selected balance sheet accounts of Crane Bros. Corp

Question

Exercise 23-10

Following are selected balance sheet accounts of Crane Bros. Corp. at December 31, 2017 and 2016, and the increases or decreases in each account from 2016 to 2017. Also presented is selected income statement information for the year ended December 31, 2017, and additional information.

2017

2016

Increase
(Decrease)

2017

2016

Increase

Additional information:

Determine the category (operating, investing, or financing) and the amount that should be reported in the statement of cash flows for the following items.

Activity

Selected balance sheet accounts Assets

2017

2016

Increase
(Decrease)

Accounts receivable $34,400 $23,900 $10,500 Property, plant, and equipment 279,500 247,600 31,900 Accumulated depreciation—plant assets (179,800 ) (168,500 ) (11,300 ) Liabilities and stockholders’ equity

2017

2016

Increase

Bonds payable $ 49,200 $45,800 $3,400 Dividends payable 8,000 4,900 3,100 Common stock, $1 par 22,100 18,800 3,300 Additional paid-in capital 8,900 3,000 5,900 Retained earnings 104,100 91,900 12,200 Selected income statement information for the year ended December 31, 2017: Sales revenue $155,100 Depreciation 38,000 Gain on sale of equipment 14,500 Net income 31,100

Explanation / Answer

Category and amount that sould be reported in the statement of cash flow: (a) Payments for purchase of property, plant, and equipment. Investing $ 56,800 (b) Proceeds from the sale of equipment. Investing $ 59,600 (c) Cash dividends paid. Financing $ 15,800 (d) Redemption of bonds payable. Financing $ 16,800 Working: (a) Cost of property,plant and equipment at the end of 2016 $       2,47,600 Less:Cost of equipment sold $           45,100 Balance after equipment sold (a) $       2,02,500 Balance at the end of year 2017 (b) $       2,79,500 Equipment purchased (b)-(a) $           77,000 Less:Bonds issued in consideration $           20,200 Equipment purchased in cash $           56,800 (b) Cost of equipment sold $           45,100 Add:Gain on sale of equipment $           14,500 Cash from sale of equipment $           59,600 (c) Step-1:Calculate dividend declared Retained Earning, 2016 $           91,900 Add:Net income for 2017 $           31,100 Less:Retained Earning, 2017 $       1,04,100 Dividend declared $           18,900 Step-2:Caculate dividend paid in cash Dividend payable, 2016 $             4,900 Add:Dividend declared $           18,900 Less:Diviend payable , 2017 $             8,000 Dividend paid in cash for 2017 $           15,800 (d) Bonds payable , 2016 $           45,800 Add:Bonds issued in exchange of Equipment $           20,200 Total $           66,000 Less: Bonds payable , 2017 $           49,200 Bonds payable redeemed in 2017 $           16,800

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