With explanation in how you got the investing part Patel Winery, Inc. Comparativ

Question

With explanation in how you got the investing part Patel Winery, Inc. Comparative Balance Sheet December 31, 2017 and 2016 2017 2016 Cash and cash equivalents$26,400 $15,900$10500 Accounts receivable Inventory Land Equipment, net 1.200 79,S00 91,200 (11.90 ) 1,000 23,60 $271.400 $233.800$32.600 Plant assets Total assets 03.90089.00 142 Current liabilities: Accounts payable $35,500 $30,600 4.900 Accrued liabilities 28,600 30,700 100) Long-term liabilities: Notes payable 78,000 101,000(23,000 Stockholders' Equity: Common stock 88,800 61,900 23,900 4.500-6600 ,0000 Total liabilities and stockholder equity $271.400 $2330 $60 Retained earnings Patel Winery, Inc. Income Statement Year Ended December 31, 2012 Revenues: Sales revenues Interest revenue Total revenues 444000 Cost of goods sold Salary expense Depreciation expense Other operating expenses Interest expense Income tax expense $202,200 78,400 14,400 10,200 21,900 Total expenses Net income Additionally, Patel Winery, Inc. purchased land of S23600 by financing 100% with long-term notes payable during 2017. During the year, there were no sales of land or equipment, no additional issuances of notes payable, no retirement of stock, and no treasury stock transactions. 1. Prepare the 2017 statement of cash flows, using the indirect method. 2. Your thoughts on the health of this company?

Explanation / Answer

Patel Winery, Inc. Statement of Cash Flows For the year ended Dec 31, 2017 Amount $ Operating Activities Net Income 97,800 Adjustments: Non-Cash adjustment: Depreciation 14,400 Due to changes in Working capital Due to changes in accounts receivable -1,200 Due to changes in Inventories          11,900 Due to changes in accounts payable            4,900 Due to changes in accruals           -2,100 Net Cash provided (used) by operating activities      1,25,700 Investing Activities Cash used to acquire Equipment (14200+14400)        -28,600 Net cash provided (used) by investing activities        -28,600 Financing Activities Due to change in notes payable (101000+23600-78000)        -46,600 Due to change in common stock          23,900 Payment of common dividends (97800-33900)        -63,900 Net cash provided (used) by investing activities)        -86,600 Net increase/decrease in cash          10,500 Add: Cash balance at the begining of the year          15,900 Cash balance at the end of the year          26,400 Note on cash flow from investing activities: 1) The land was purchased by issue of 100% note payable. Hence it shall not be considered in cash flow statement (there is no cash involved here) 2) The ending balance of equipment of $103900 is after adjusting the depreciation. Hence while calculating the purchase value of equipment the depreciation amount should be added to the differences The company has a good operating cash flow (ie, $125700) But the investing and financing activities gives a negative cash flow

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