The balance sheet for Plasma Screens Corporation along with additional informati
ID: 2575440 • Letter: T
Question
The balance sheet for Plasma Screens Corporation along with additional information, are provided below:
Additional Information for 2018:
1. Net income is $160,000.
2. The company purchases $200,000 in equipment.
3. Depreciation expense is $80,000.
4. The company repays $75,000 in notes payable.
5. The company declares and pays a cash dividend of $35,000.
Prepare the statement of cash flows using the indirect method.
PLASMA SCREENS CORPORATIONBalance Sheets
December 31, 2018 and 2017 2018 2017 Assets: Current assets: Cash $ 82,000 $ 120,000 Accounts receivable 72,000 96,000 Inventory 65,000 80,000 Prepaid rent 5,000 4,000 Long-term assets: Land 500,000 500,000 Equipment 800,000 600,000 Accumulated depreciation (380,000) (300,000) Total assets $ 1,144,000 $ 1,100,000 Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $ 78,000 $ 82,000 Interest payable 5,000 9,000 Income tax payable 9,000 7,000 Long-term liabilities: Notes payable 75,000 150,000 Stockholders' equity: Common stock 600,000 600,000 Retained earnings 377,000 252,000 Total liabilities and stockholders' equity $ 1,144,000 $ 1,100,000
Explanation / Answer
PLASMA SCREENS CORPORATION
CASH FLOW STATEMENT FOR THE YEAR ENDED DEC 31,2018
$
$
CASH FLOW FROM OPERATING ACTIVITIES
Net Profit /Operating Profit Before Tax &Working Capital Changes
1,60,000.00
Adjustment For non cash items and working capital changes:
Depreciation
80,000.00
Accounts receivable
24,000.00
Ineventory
15,000.00
Prepaid rent
(1,000.00)
Accounts payable
(4,000.00)
Interest payable
(4,000.00)
Income tax payable
2,000.00
Cash From Operating Activities Before Taxes
2,72,000.00
Less: Taxes paid during the year
-
NET CASH FROM OPERATING ACTIVITIES (A)
2,72,000.00
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of equipment
(2,00,000.00)
NET CASH FROM INVESTING ACTIVITIES (B)
(2,00,000.00)
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of notes
(75,000.00)
Payment of dividend
(35,000.00)
NET CASH FROM FINANCING ACTIVITIES (C)
(1,10,000.00)
NET CHANGES IN CASH AND CASH EQUIVALENTS (A+B+C)
(38,000.00)
ADD: OPENING CASH AND CASH EQUIVALENTS
1,20,000.00
CLOSING CASH AND CASH EQUIVALENTS
82,000.00
PLASMA SCREENS CORPORATION
CASH FLOW STATEMENT FOR THE YEAR ENDED DEC 31,2018
$
$
CASH FLOW FROM OPERATING ACTIVITIES
Net Profit /Operating Profit Before Tax &Working Capital Changes
1,60,000.00
Adjustment For non cash items and working capital changes:
Depreciation
80,000.00
Accounts receivable
24,000.00
Ineventory
15,000.00
Prepaid rent
(1,000.00)
Accounts payable
(4,000.00)
Interest payable
(4,000.00)
Income tax payable
2,000.00
Cash From Operating Activities Before Taxes
2,72,000.00
Less: Taxes paid during the year
-
NET CASH FROM OPERATING ACTIVITIES (A)
2,72,000.00
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of equipment
(2,00,000.00)
NET CASH FROM INVESTING ACTIVITIES (B)
(2,00,000.00)
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of notes
(75,000.00)
Payment of dividend
(35,000.00)
NET CASH FROM FINANCING ACTIVITIES (C)
(1,10,000.00)
NET CHANGES IN CASH AND CASH EQUIVALENTS (A+B+C)
(38,000.00)
ADD: OPENING CASH AND CASH EQUIVALENTS
1,20,000.00
CLOSING CASH AND CASH EQUIVALENTS
82,000.00
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