1 Dec. 31, 20Y8 Dec. 31, 20Y7 2 Assets 3 Cash $146,480.00 $179,640.00 4 Accounts
ID: 2542698 • Letter: 1
Question
1
Dec. 31, 20Y8
Dec. 31, 20Y7
2
Assets
3
Cash
$146,480.00
$179,640.00
4
Accounts receivable (net)
225,010.00
241,920.00
5
Inventories
321,600.00
298,870.00
6
Prepaid expenses
13,030.00
10,420.00
7
Equipment
654,380.00
537,900.00
8
Accumulated depreciation-equipment
(169,970.00)
(133,130.00)
9
Total assets
$1,190,530.00
$1,135,620.00
10
Liabilities and Stockholders’ Equity
11
Accounts payable (merchandise creditors)
$240,960.00
$236,720.00
12
Mortgage note payable
0.00
335,410.00
13
Common stock, $10 par
510,000.00
247,000.00
14
Paid-in capital: Excess of issue price over par—common stock
430,000.00
310,000.00
15
Retained earnings
9,570.00
6,490.00
16
Total liabilities and stockholders’ equity
$1,190,530.00
$1,135,620.00
Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:
Cash dividends declared and paid, $152,480
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
1
Dec. 31, 20Y8
Dec. 31, 20Y7
2
Assets
3
Cash
$146,480.00
$179,640.00
4
Accounts receivable (net)
225,010.00
241,920.00
5
Inventories
321,600.00
298,870.00
6
Prepaid expenses
13,030.00
10,420.00
7
Equipment
654,380.00
537,900.00
8
Accumulated depreciation-equipment
(169,970.00)
(133,130.00)
9
Total assets
$1,190,530.00
$1,135,620.00
10
Liabilities and Stockholders’ Equity
11
Accounts payable (merchandise creditors)
$240,960.00
$236,720.00
12
Mortgage note payable
0.00
335,410.00
13
Common stock, $10 par
510,000.00
247,000.00
14
Paid-in capital: Excess of issue price over par—common stock
430,000.00
310,000.00
15
Retained earnings
9,570.00
6,490.00
16
Total liabilities and stockholders’ equity
$1,190,530.00
$1,135,620.00
Explanation / Answer
Statement of Cash Flows
For the year Ended December 31, 20Y8 (Amounts in $)
Working Notes:-
1) Increase in current assets and decrease in curent liabilities will be deducted from net income to reconcile the net income to cash flows from operating activities. Similarly, decrease in current assets and increase in curent liabilities will be added to net income.
2) Net increase in common stock in 20Y8 is $263,000 ($510,000 - $247,000) and increase in paid in capital: excess of issue price over par-Common Stock is $120,000 ($430,000 - $310,000). Hence total cash flow from issuance of common stock is $383,000 ($263,000+$120,000).
Cash Flows from Operating Activities: Net Income 155,560 Adjustments to reconcile net income to net cash provided by operating activities: Add: Depreciation expense 82,480 Add: Decrease in Accounts Receivable (241,920 - 225,010) 16,910 Less: Increase in Inventory (321,600 - 298,870) (22,730) Less: Increase in Prepaid Expenses (13,030 - 10,420) (2,610) Add: Increase in Accounts Payable (240,960 - 236,720) 4,240 Net Cash provided by Operating Activities (A) 233,850 Cash flows from Investing Activities: Cash paid for purchase of Equipment (162,120) Net cash used in investing activities (B) (162,120) Cash flows from Financing Activities: Cash received from stock issuance (Working Note 2) 383,000 Cash paid for cash dividends (152,480) Cash flow for mortgage note payable (335,410) Net cash used in financing activities (C) (104,890) Net Increase (decrease) in cash (D = A+B+C) (33,160) Cash Balance at the beginning of year (E) 179,640 Cash Balance at the end of year (D+E) 146,480Related Questions
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