Erroneous Statement of Cash Flows Ryan Company\'s bookkeeper prepared the follow

Question

Erroneous Statement of Cash Flows

Ryan Company's bookkeeper prepared the following 2016 statement of cash flows:

After a thorough investigation, you have determined that the amounts of the items listed on the statement are correct. However, you notice several items that are incorrectly classified and reported.

Required

Prepare a corrected 2016 statement of cash flows for the Ryan Company. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.

Operating Activities

________________         __________

Adjustment for non cash income items:

________________         __________

________________         __________

________________         __________

________________         __________

Adjustments for cash flow effects from working capital items:

________________         __________

________________         __________

________________         __________

________________         __________

________________         __________

Net cash provided by operating activities ____________

Investing Activities:

________________         __________

________________         __________

________________         __________

________________         __________

Net cash used for investing activities _________

Financing Activities:

________________         __________

________________         __________

________________         __________

________________         __________

Net cash provided by financing activies _________

Net increase in cash _________

Cash, january 1, 2016 _________

Cash, december 31, 2016 _________

Investing and Financing Activities not Affecting Cash

Investing Activities:

Acquistion of patent by issuing commons stock ______________

Financing Activities:

Issuance of common stock for patent ____________

Flows of Cash Statement
December 31, 2016 Sources (Inflows) of Cash Net Source from Operations       Net income $47,800          Add: Cash receipt from sale of land 6,500                  Inflow from issuing 10% bonds payable 25,000                  Depreciation expense 13,200                  Reduction in inventory 1,900          Less: Outflow to buy equipment (16,400)                   Increase in prepaid expenses (700)                   Cash (principal) paid on long-term note (9,500)                   ordinary gain (2,000)       Total source from operations $65,800 Other Sources (Inflows) of Cash       Loss on sale of land $2,300       Increase in accounts payable 1,000       Cash from issuing preferred stock 38,700       Patent amortization expense 2,100       Total other sources of cash 44,100 Sources (Financing) Not Affecting Cash       Issuance of common stock for patent 11,000       Total inflows of cash $120,900 Uses (Outflows) of Cash       To purchase building $(62,000)       Increase in accounts receivable (7,800)       For acquiring marketable securities (7,100)       Decrease in income taxes payable (1,400)       Total uses of cash (78,300) Uses (Investing) Not Affecting Cash       Acquisition of patent by issuing common stock (11,000)       Net inflow before dividends $ 31,600       Less: Cash dividends (24,000) Net increase in cash $7,600 Cash, January 1, 2016 15,300 Cash, December 31, 2016 $22,900

Explanation / Answer

Investing and Financing activities not affecting cash:

Investing :

acquisition of patent by issuing common stock = 11000

Financing :

Issuance of common stock for patent = 11000

Particulars amount amount Cash flow from Operations Net income 47800 Non cash items adjustment : Depreciation expense 13200 Amortisation expense 2100 Others: Ordinary gain (2000) Loss on sale of land 2300 63400 Working capital adjustments: Decrease in inventory 1900 Increase in prepaid expenses (700) Increase in account payable 1000 Increase in account receivable (7800) Decrease in income tax payable (1400) Net cash flow from operating activities 56400 Cash flow from investing activities Sale of land 6500 Bought equipment (16400) Long term loan note (9500) Cash from Preferred stock 38700 Purchase of building (62000) Marketable security purchase (7100) Net cash flow from investing activities (49800) Cash flow from financing activities : Issue of 10% bonds 25000 Cash dividend paid (24000) Net cash flow from financing activities 1000 Net increase in cash 7600 Cash - Jan 1,2016 15300 Cash - Dec 31,2016 22900

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