Exercise 12-7 Shown below are comparative balance sheets for Sage Hill Company.

Question

Exercise 12-7 Shown below are comparative balance sheets for Sage Hill Company. Sage Hill Company Comparative Balance Sheets December 31 2016 $ 74,492 257,336 639,954 338,600 677,200 Assets Cash Accounts receivable Inventory Land Equipment Accumulated depreciation-equipment (223,476 Total Liabilities and Stockholders Equity Accounts payable Bonds payable Common stock ($1 par) Retained earnings Total 2017 $ 230,248 297,968 565,462 270,880 880,360 108,352) $2,021,442 $1,879,230 132,054 145,598 677,200 589,164 467,268 $2,021,442 $1,879,230 507,900 731,376 650,112 Additional information: 1. Ne t income for 2017 was $314,898

Explanation / Answer

Sage Hill Company Cash Flow Statement For the year ended December 31, 2017 Cash flows from operating activities Net Income $   314,898 Adjustment to reconcile net income to: Depreciation expense $   115,124 Increase in accounts receivable $   (40,632) Decrease in inventory $      74,492 Decrease in accounts payable $   (13,544) $   135,440 Net cash provided by operating activities $   450,338 Cash flows from investing activities Proceeds from sale of land $      67,720 $338,600-$270,880 Purchase of equipment $ (203,160) $677,200-$880,360 Net cash used by investing activities $ (135,440) Cash flows from financing activities Repayment of bonds $ (169,300) Proceeds from issue of stock $   142,212 Dividend paid $ (132,054) Net cash used by financing activities $ (159,142) Net increase in cash and cash equivalents $   155,756 Cash and cash equivalents at beginning of period $      74,492 Cash and cash equivalents at end of period $   230,248

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