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*Problem 12-9A Condensed financial data of Pharoah Company follow Pharoah Company Comparative Balance Sheets December 31 Assets 2017 2016 $92,444 72,580 196,444 49,660 208,190 463,175 $154,328 167,698 214,875 Accounts receivable Inventory Prepaid expenses Long-term investments Plant assets Accumulated depreciation 263,580 544,350 (95,500) (99,320) $1,303,575 $983,173 Liabilities and Stockholders Equity Accounts payable Accrued expenses payable Bonds payable Common stock Retained earnings 31,515 210,100 420,200 446,940 $1,303,575 $ 194,820 128,543 40,110 278,860 34,250 201,410 $983,173 Pharoah Company Income Statement Data For the Year Ended December 31, 2017 Sales revenue $741,959 $258,729 23,703 88,815 52,105 Cost of goods sold Operating expenses, excluding depreciation Depreciation expense Income tax expense Interest expense Loss on disposal of plant assets 14,325 446,711 Net income $ 295,248 Additional information: 1. New plant assets costing $191,000 were purchased for cash during the year. 2. Old plant assets having an original cost of $109,825 and accumulated depreciation of $92,635 were sold for $2,865 cash 3. Bonds payable matured and were paid off at face value for cash 4. A cash dividend of $49,718 was declared and paid during the year. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Pharoah Company Statement of Cash Flows For the Year Ended Dece Cash Flows from Operatin Net Income Adjustments to reconcile net income to Net Cash Provided by Ope Decrease in Accrued Expe Increase in Inventory Increase in Accounts Rec Depreciation Expense Loss on Disposal of Plant Increase in Prepaid Expen Increase in Accounts Paya 295,248 Net Cash Provided by Ope Cash Flows from Investin Purchase of Investments Purchase of Plant Assets Sale of Plant Assets Net Cash Provided by Inv Net Cash used by Financi Redemption of Bonds Sale of Common Stock Payment of Cash Dividend Net Cash used by Financin et Increase in Cash Cash at Beginning of Peri Cash at End of Period Question Attempts: 0 of 3 used 2000-2018 by John Wiley All

Explanation / Answer

Statement of Cash Flows For the Year Ended December 31, 2017 Cash Flows from Operating Activities: Net income 295248 Adjustments to reconcile net income to Net cash provided by operating activities Depreciation expense 88815 Loss on disposal of plant assets 14325 Increase in Accounts receivable -95118 Increase in inventory -18431 Increase in Prepaid expenses -4584 Increase in accounts payable 66277 Decrease in accrued expenses payable -8595 42689 Net cash provided by operating activities 337937 Cash Flows from Investing Activities: Purchase of Plant assets -191000 Purchase of Long-term investments -55390 Sale of plant assets 2865 Net Cash Provided by Investing Activities -243525 Cash Flows from Financing Activities Redemption of bonds -68760 Sale of Common stock 85950 Payment of Cash Dividends -49718 Net Cash Used by Financing Activities -32528 Net Increase in Cash 61884 Cash at Beginning of Period 92444 Cash at End of Period 154328

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