A comparative balance sheet and income statement is shown for Cruz, Inc. CRUZ, I
ID: 2528650 • Letter: A
Question
A comparative balance sheet and income statement is shown for Cruz, Inc. CRUZ, INC. Comparative Balance Sheets December 31, 2017 2017 2016 Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Furniture Accum. depreciation-Furniture $ 89,000 22,100 46,900 88,000 4,000 161,000 113,300 (8,600 $295,600 $265,700 38,200 80,000 4,900 212,100 98,800 (15,300) Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long-term) Total liabilities Equity Common stock, $5 par value Retained earnings $ 13,900 8,200 1,400 23,500 28,900 52,400 19,600 4,600 2,600 26,800 69,000 95,800 215,000 28,200 169,100 800 Total liabilities and equity $295,600 $265,700 CRUZ, INC. Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses $454,900 292,800 162,100 Depreciation expense $35,000 Other expenses Income before taxes Income taxes expense Net income 83,000 118,000 44,100 16,000 $ 28,100Explanation / Answer
Solution:
Particulars
Amount ($)
Amount ($)
CASH FLOW FROM OPERATING ACTIVITIES
Net Income
28,100
Adjustments to reconcile net income to operating cash flow
Income statement items not affecting cash
Add: Depreciation expense
35,000
Changes in current operating assets and liabilities
Add: Decrease in Accounts Receivable , Net ($ 46,900 - $ 38,200)
8,700
Add: Decrease in Inventory ($ 88,000 - $ 80,000)
8,000
Add: Increase in Wages Payable ($ 8,200 - $ 4,600)
3,600
Less: Increase in Prepaid expenses ($ 4,900 - $ 4,000)
(900)
Less: Decrease in Accounts Payable ($ 19,600 - $ 13,900)
(5,700)
Less: Decrease in Income tax Payable ($ 2,600 - $ 1,400)
(1,200)
47,500
Net Cash provided by operating activities
$ 75,600
Solution (1):
Retained Earnings
Particulars
Debit Amount ($)
Particulars
Credit Amount ($)
Dividend paid (Balancing Figure)
700
Beginning Balance
800
Net Income (2017)
28,100
Ending Balance
28,200
Total
28,900
Total
28,900
Amount of Cash dividend paid in 2017 is $ 700.
Solution (2):
Notes Payable
Particulars
Debit Amount ($)
Particulars
Credit Amount ($)
Cash paid or Repayment (Balancing Figure)
40,100
Beginning Balance
69,000
Ending Balance
28,900
Total
69,000
Total
69,000
Amount of Cash paid to reduce notes payable balance in 2017 is $ 40,100.
Solution:
Furniture
Particulars
Debit Amount ($)
Particulars
Credit Amount ($)
Beginning Balance
113,300
Cash Sale at book value (Balancing Figure)
43,200
Acquisition (Cash)
57,000
Accumulated Depreciation
28,300
Ending Balance
98,800
Total
170,300
Total
170,300
Accumulated Depreciation
Particulars
Debit Amount ($)
Particulars
Credit Amount ($)
Beginning Balance
8,600
Furniture Account (Accumulated Depreciation on furniture sold)
(Balancing Figure)
28,300
Income Statement (Depreciation expense 2017)
35,000
Ending Balance
15,300
Total
43,600
Total
43,600
Particulars
Amount ($)
Cost
71,500
Accumulated Depreciation
(28,300)
Book Value (Cash Received)
43,200
Cash flow related to sale of furniture is $ 43,200.
Particulars
Amount ($)
Amount ($)
CASH FLOW FROM OPERATING ACTIVITIES
Net Income
28,100
Adjustments to reconcile net income to operating cash flow
Income statement items not affecting cash
Add: Depreciation expense
35,000
Changes in current operating assets and liabilities
Add: Decrease in Accounts Receivable , Net ($ 46,900 - $ 38,200)
8,700
Add: Decrease in Inventory ($ 88,000 - $ 80,000)
8,000
Add: Increase in Wages Payable ($ 8,200 - $ 4,600)
3,600
Less: Increase in Prepaid expenses ($ 4,900 - $ 4,000)
(900)
Less: Decrease in Accounts Payable ($ 19,600 - $ 13,900)
(5,700)
Less: Decrease in Income tax Payable ($ 2,600 - $ 1,400)
(1,200)
47,500
Net Cash provided by operating activities
$ 75,600
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