Problem 23-2 The comparative balance sheets for Nash Corporation show the follow
ID: 2524720 • Letter: P
Question
Problem 23-2 The comparative balance sheets for Nash Corporation show the following information December 31 2017 2016 Cash Accounts receivable Inventory Available-for-sale debt investments Buildings Equipment Patents $33,500 $12,900 10,000 9,000 3,000 29,800 19,900 6,300 $107,800 $90,900 12,400 12,100 0 44,800 5,000 Allowance for doubtful accounts Accumulated depreciation-equipment Accumulated depreciation-building Accounts payable Dividends payable Notes payable, short-term (nontrade) Long-term notes payable Common stock Retained earnings $3,100$4,500 4,500 6,000 3,000 4,900 4,100 25,000 33,000 5,900 $107,800 $90,900 2,000 0 5,000 3,000 31,000 43,000 20,700Explanation / Answer
Solution:
NASH CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2017
Particulars
Amount ($)
Amount ($)
A. CASH FLOWS FROM OPERATING ACTIVITIES
Net Income
(Retained Earning Difference $ 20,700 - $ 5,900)
14,800
Adjustments to reconcile net income
Add: Depreciation Expense (equipment only) (WN 1)
1,900
Add: Amortization Expense on patent ($ 6,300- $ 5,000)
1,300
Add: Loss on sale of equipment (WN 2)
4,100
Less: Gain on sale of investment
(1,800)
Less: Gain from flood damage (29,900+2,000)-(29,800-6,000)
Note: $ 6,000 is the amount of depreciation and $ 2,000 is tax amount.
(8,100)
Less: Increase in Accounts Receivable (net w/Allowance) ($ 12,400- $ 3,100) - ($10,000- $ 4,500)
(3,800)
Less: Increase in Inventory ($ 12,100-$9,000)
(3,100)
Add: Increase in Accounts Payable ($ 5,000-$3,000)
2,000
(7,500)
Net cash provided by operating activities
7,300
B. CASH FLOWS FROM INVESTING ACTIVITIES
Sale of Investments(available-for-sale) (3,000 +1,800)
4,800
Sale of Equipment
2,500
Proceeds from damage to building (flood) (29,900+2,000)
31,900
Purchase of Equipment (WN 3)
(19,900)
Net cash provided by investing activities
19,300
C. CASH FLOWS FROM FINANCING ACTIVITIES
Payment of Short-term Notes Payable($ 4,100-$3,000)
(1,100)
Dividends paid in cash
(4,900)
Net cash used by financing activities
(6,000)
INCREASE IN CASH (A + B + C)
20,600
Add: Cash at the beginning of year
12,900
Cash at the end of year
33,500
Supplemental disclosures of cash flow information:
Particulars
Amount ($)
Cash paid during the year for:
Interest
2000
Income taxes:
6,500
Total
8,500
Particulars
Amount ($)
Noncash investing and financing activities
Retired note payable by issuing common stock
10,000
Purchased equipment by issuing note payable
16,000
Total
26,000
Working Note (WN):
(1)Accumulated depreciation-equipment Account
Particulars
Debit Amount ($)
Particulars
Credit
Amount ($)
Depreciation on equipment sold ($ 11,000 X 40%)*
4,400
Beginning Balance
4,500
Depreciation (for Current Year- 2017)
(Balancing figure)
1,900
Ending Balance
2,000
Total
6,400
Total
6,400
(2) Loss on sale of equipment
= (Cost of equipment- Depreciation*) – Sale value
= ($ 11,000 -$ 4,400) - $ 2,500
=$ 6,600 - $ 2,500
=$ 4,100
(3)Equipment Account
Particulars
Debit Amount ($)
Particulars
Credit
Amount ($)
Beginning Balance
19,900
Sale (cash)
2,500
Purchase :
Cash : $ 19,900
Notes Payable: $ 16,000
(Balancing figure
35,900
Loss on sale of equipment (WN 2)
4,100
Depreciation on equipment sold ($ 11,000 X 40%)*
4,400
Ending Balance
44,800
Total
55,800
Total
55,800
Particulars
Amount ($)
Amount ($)
A. CASH FLOWS FROM OPERATING ACTIVITIES
Net Income
(Retained Earning Difference $ 20,700 - $ 5,900)
14,800
Adjustments to reconcile net income
Add: Depreciation Expense (equipment only) (WN 1)
1,900
Add: Amortization Expense on patent ($ 6,300- $ 5,000)
1,300
Add: Loss on sale of equipment (WN 2)
4,100
Less: Gain on sale of investment
(1,800)
Less: Gain from flood damage (29,900+2,000)-(29,800-6,000)
Note: $ 6,000 is the amount of depreciation and $ 2,000 is tax amount.
(8,100)
Less: Increase in Accounts Receivable (net w/Allowance) ($ 12,400- $ 3,100) - ($10,000- $ 4,500)
(3,800)
Less: Increase in Inventory ($ 12,100-$9,000)
(3,100)
Add: Increase in Accounts Payable ($ 5,000-$3,000)
2,000
(7,500)
Net cash provided by operating activities
7,300
B. CASH FLOWS FROM INVESTING ACTIVITIES
Sale of Investments(available-for-sale) (3,000 +1,800)
4,800
Sale of Equipment
2,500
Proceeds from damage to building (flood) (29,900+2,000)
31,900
Purchase of Equipment (WN 3)
(19,900)
Net cash provided by investing activities
19,300
C. CASH FLOWS FROM FINANCING ACTIVITIES
Payment of Short-term Notes Payable($ 4,100-$3,000)
(1,100)
Dividends paid in cash
(4,900)
Net cash used by financing activities
(6,000)
INCREASE IN CASH (A + B + C)
20,600
Add: Cash at the beginning of year
12,900
Cash at the end of year
33,500
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.