CAROLINA CORPORATION Comparative Statements of Financial Position December 31 20
ID: 2540085 • Letter: C
Question
CAROLINA CORPORATION
Comparative Statements of Financial Position
December 31 2014 2013
Cash ..................................................... $ 43,000 $ 24,000
Accounts receivable, net .......................... 35,000 38,000
Inventory ............................................... 114,000 82,000
Land ...................................................... 120,000 190,000
Building ................................................. 200,000 200,000
Accumulated depreciation ......................... (50,000) (40,000)
Equipment ............................................. 1,030,000 600,000
Accumulated depreciation ......................... (118,000) (94,000)
$1,374,000 $1,000,000
Accounts payable .................................... $ 115,000 $ 100,000
4% Bonds payable .................................. 320,000 -0-
Common shares ...................................... 750,000 750,000
Retained earnings ................................... 189,000 150,000
$1,374,000 $1,000,000
Additional data:
1. Net income for the year was $84,000.
2. Cash dividends were paid.
3. Land was sold for $80,000.
4. Old equipment was sold for $70,000. This equipment had cost $150,000 and had accumulated depreciation of $60,000 to date of sale. New equipment was purchased to replace it.
Instructions: Prepare a statement of cash flows for calendar 2014, using the indirect method.
Explanation / Answer
CAROLINA CORPORATION Statement of Cash Flows For the Year Ended December 31, 2014 Cash flows from operating activities: Net income 84000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 94000 Gain on sale of Land -10000 Loss on sale of Equipment 20000 Decrease in accounts receivable 3000 Increase in merchandise inventory -32000 Increase in accounts payable 15000 90000 Net cash provided by operating activities 174000 Cash flows from investing activities: Cash payments to purchase Equipment -580000 Proceeds from sale of Equipment 70000 Proceeds from sale of Land 80000 Net cash used in investing activities -430000 Cash flows from financing activities: Cash payments for dividends -45000 Proceeds from Bonds payable 320000 Net cash provided by financing activities 275000 Net increase in cash during the year 19000 Cash balance, January 1 24000 Cash balance, December 31 43000
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