View Favorites Tools Help very Service from UPS Intermountain Express e 180 Radi
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View Favorites Tools Help very Service from UPS Intermountain Express e 180 Radiator. C M3 webPunchClock a 180 Radiator Inventory. Problem 13.7A Prepare and Analyze a Statement of Cash Flows with a Worksheet Satellite World was founded in 2014 to apply a new technology for efficiently transmitting closedcircuit (cable) television signals without the need for an in-ground cable. The company earned a profit of $115,000 in 2014, its first year of operations, even though it was serving only a small test market. In 2015, the company began dramatically expanding its customer base. Management expects both sales and net income to more than triple in each of the next five years. Comparative balance sheets at the end of 2014 and 2015, the company's first two years of operations follow. (Notice that the balances at the end of the current year appear in the right-hand column.) Additional Information The following information regarding the company's operations in 2015 is available in either the company's income statement or its accounting records: 0 1. Net income for the year was $440,000. The company has never paid a dividend preciation for the year amounted to $147,000 3. During the year the company purchased plant assets costing $2,200,000, for which it paid $1,850,000 in cash and financed $350,000 by issuing a long-term note payable. (Much of the cash used in these purchases was provided by short-term borrowing, as described below.) 4. In 2015, Satellite World borrowed $1.450 000 against a $5.5 million line of credit with a local bank. In its 2 balance sheet the resulting obligations are reported as notes payable (shor-term) Additional shares of capital stock (no par value) were issued to investors for $500 000 cash SATELLITE WORLD COMPARATIVE BALANCE SHEETS 8 December 31Explanation / Answer
Answer a. SATELLITE WORLD Worksheet for a Statement of Cash Flows For the Year Ended Dec 31, 2015 Balance Sheet Effects: Effects of Transactions Beginning Balance Debit Changes Credit Changes Ending Balance Assets Cash & Cash Equivalents 80,000.00 43,000.00 37,000.00 Accounts Receivable 100,000.00 750,000.00 850,000.00 Plant & Equipment 600,000.00 2,053,000.00 2,653,000.00 Totals 780,000.00 3,540,000.00 Liabilities & Owners' Equity Notes Payable (Short Term) - 1,450,000.00 1,450,000.00 Accounts Payable 30,000.00 33,000.00 63,000.00 Accrued Expenses Payable 45,000.00 13,000.00 32,000.00 Notes Payable (Long Term) 390,000.00 350,000.00 740,000.00 Capital Stock 200,000.00 500,000.00 700,000.00 Retained Earnings 115,000.00 440,000.00 555,000.00 Total 780,000.00 2,816,000.00 2,816,000.00 3,540,000.00 Cash Effects: Sources Uses Operating Activities: Net Income 440,000.00 Depreciation Expense 147,000.00 Inrease in Accounts Receivables 750,000.00 Increase in Accounts Payable 33,000.00 Increase in Accrued Expenses Payable 13,000.00 Investing Activities: Purchase of Plant Assets 1,850,000.00 Financing Activities: Issue of Short Term Notes Payable 1,450,000.00 Issue of Common Stock 500,000.00 Sub-totals 2,570,000.00 2,613,000.00 Net Decrease in cash 43,000.00 Totals 2,613,000.00 2,613,000.00 Answer b. SATELLITE WORLD Statement of Cash Flows (Indirect Method) For the Year ended Dec 31, 2015 Cash Flow from opearating activities: Net Income 440,000.00 Add/(Less) non cash effects on operating activities Depreciation expense 147,000.00 Inrease in Accounts Receivables (750,000.00) Increase in Accounts Payable 33,000.00 Increase in Accrued Expenses Payable (13,000.00) (583,000.00) Net Cash used by operating activities (143,000.00) Cash flow from Investing Activities Purchase of Plant Assets (1,850,000.00) Net Cash used by Investing activities (1,850,000.00) Cash Flow from Financing Activities Issue of Short Term Notes Payable 1,450,000.00 Issue of Common Stock 500,000.00 Net Cash provided by Financing activities 1,950,000.00 Net Increase / (Decrease) in Cash (43,000.00) Cash balance at the Dec 31, 2015 80,000.00 Cash balance at the end - Dec 31, 2016 37,000.00
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