ATC 12-3 of Fundamental Financial Accounting Concepts, Ninth Edition. 12-3 Group

Question

ATC 12-3 of Fundamental Financial Accounting Concepts, Ninth Edition.

12-3 Group Assignment Preparing a statement of cash flows The following financial statements and information are available for Blythe Industries Inc. ATC Balance Sheets As of December 31 2017 2016 Assets Cash Accounts receivable Inventory Marketable securities (available for sale) Equipment Accumulated depreciation Land $ 160,200 103,200 186,400 284,000 650,000 (310,000) 80,000 $1,153,800 $120,600 85,000 171,800 220,000 490,000 (240,000) 120,000 $967,400 Total assets Liabilities and equity Liabilities Accounts payable (inventory) Notes payable-Long-term Bonds payable S 36,400 230,000 200,000 466,400 S 66,200 250,000 100,000 416,200 Total liabilities Stockholders' equity Common stock, no par Preferred stock, $50 par Paid-in capital in excess of par-Preferred stock Total paid-n capital 240,000 110,000 34,400 384,400 333,000 200,000 100,000 26,800 326,800 264,400 (40,000) 551,200 $967,400 Retained earnings Less: Treasury stock Total stockholders' equity Total liabilities and stockholders' equity 687,400 $1,153,800 Income Statement For the Year Ended December 31, 2017 Sales revenue Cost of goods sold Gross profit Operating expenses $1,050,000 (766,500) 283,500 Supplies expense Salaries expense Depreciation expense $20,400 92,000 90,000 Total operating expenses Operating income Nonoperating items 81,100 Interest expense Gain from the sale of marketable securities Gain from the sale of land and equipment (16,000) 30,000 12,000 s 107,100 Net income

Explanation / Answer

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Cash flow Statement Particulars Amount Operating Activity Net Income from P/L 107100 Add: Depreciation 90000 Add: interest expenses 16000 Less: Gain on marketable securities -30000 Less: Gain on sale of land & Equipments -12000 Working Capital Adjustment Less: Increase in accounts receivable -18200 Less: increase in inventories -14600 Less: accounts receivable -29800 Cash inflow from Opareting Activity (A) 108500 Particulars Amount investing Activity Add: Sale of land 44000 Add: Sale of equipment 18000 Less: Purchase of new equipment -190000 Add: sale of marketable securitie 70000 Less: Purchase of marketable securitie -104000 Cash outflow from investing Activity (B) -162000 Particulars Amount Operating Activity Less: Principal of notes paid -20000 Less: Bond Paid off -100000 Add: New Bond Issue 200000 Add: Sale of treasury stock 10000 Add: Issue of common stock 40000 Add: Issue of Preferred stock 10000 Less: Dividend Paid* -38500 Less: Interest Paid -16000 Add: Paid in capital in excess 7600 Cash flow from Opareting Activity (A) 93100 *Calculation of dividend Retained earning opening 264400 Add: net profit for the year 107100 Less: Retained earning closing 333000 Dividend Paid during the year 38500

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