Pronghorn Inc., a greeting card company, had the following statements prepared a
ID: 2581854 • Letter: P
Question
Pronghorn Inc., a greeting card company, had the following statements prepared as of December 31, 2017.
PRONGHORN INC.
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2017 AND 2016
12/31/17
12/31/16
$6,100
$6,900
62,500
51,000
34,800
18,100
39,600
60,200
4,900
4,000
154,500
130,100
(34,800
(25,300
46,300
50,400
$313,900
$295,400
$46,000
$40,200
4,000
6,000
8,100
4,000
8,000
10,000
59,700
69,000
100,000
100,000
30,000
30,000
58,100
36,200
$313,900
$295,400
PRONGHORN INC.
INCOME STATEMENT
FOR THE YEAR ENDING DECEMBER 31, 2017
$339,075
175,000
164,075
119,900
44,175
$11,300
2,000
9,300
34,875
6,975
$27,900
Additional information:
Prepare a statement of cash flows using the indirect method.
PRONGHORN INC.
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2017 AND 2016
12/31/17
12/31/16
Cash$6,100
$6,900
Accounts receivable62,500
51,000
Short-term debt investments (available-for-sale)34,800
18,100
Inventory39,600
60,200
Prepaid rent4,900
4,000
Equipment154,500
130,100
Accumulated depreciation—equipment(34,800
)(25,300
) Copyrights46,300
50,400
Total assets$313,900
$295,400
Accounts payable$46,000
$40,200
Income taxes payable4,000
6,000
Salaries and wages payable8,100
4,000
Short-term loans payable8,000
10,000
Long-term loans payable59,700
69,000
Common stock, $10 par100,000
100,000
Contributed capital, common stock30,000
30,000
Retained earnings58,100
36,200
Total liabilities & stockholders’ equity$313,900
$295,400
Explanation / Answer
Ans. Cash flow statement for the year of 2017
Operating Activities Amt in $
Net Income $27900
Add: Depreciation Exp. * $23430
Add: Amortisation exp.of copyright $4100
Less: Gain of sale of equipment ($2000)
Adjustment of current assets/liabilities
Increase of Account Receivable ($11500)
Decrease of Inventory $20600
Increase of prepaid exp. ($900)
Increase of account payable $5800
Payment of I.tax last yr ($2000)
Increase of salaries and wages $4100
cash flow from operating activities (1) $69530
Cash flow from Investment activities
Purchase of Short term investment ($16700)
Sale of equipment (19900X.30)+2000 $7970
Purchasing of Equipment** ($44300)
Cash flow from Investment activities (2) ($53030)
Cash flow from Financial Activities
Payment of short term loan (10000-8000) ($2000)
Payment of long term loan(69000-59700) ($9300)
Payment of dividend ($6000)
Cash flow from Financial Activities(3) ($17300)
Net Cash flow during the yr (1+2+3) ($800)
Cash and cash equivalent opening $6900
Add: Cash flow during the yr ($800)
Cash and cash equivalent closing $6100
Note : Calculation of Depreciation Exp.
Closing Balance of depreciation $34800
Add: W/off Dep. on sale of equipment $13930
Total $48730
Opening Balance of Depreciation $25300
Depreciation Exp. (Difference) $23430
Note: 2 Calculation of Fixed Assets purchase during the yr
Fixed Assets A/c
To Bal. b/d(net) $104800 By Sale of Fixed Assets(19900X.30) $5970
To Purchase (Diff.) $44300 By Depreciation $23430
By Balance C/d $119700
$149100 $149100
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