Exercise 23-12 Condensed financial data of Bonita Company for 2017 and 2016 are

Question

Exercise 23-12

Condensed financial data of Bonita Company for 2017 and 2016 are presented below.

BONITA COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2017 AND 2016

2017

2016

$1,830

$1,160

1,750

1,270

1,580

1,860

1,900

1,690

(1,190

(1,150

1,280

1,400

$7,150

$6,230

$1,220

$920

210

250

1,410

1,520

1,910

1,730

2,400

1,810

$7,150

$6,230

BONITA COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017

$6,930

4,670

2,260

940

1,320

80

1,400

550

260

$590

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2017.

Prepare a statement of cash flows using the direct method. (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Exercise 23-12

Condensed financial data of Bonita Company for 2017 and 2016 are presented below.

BONITA COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2017 AND 2016

2017

2016

Cash

$1,830

$1,160

Receivables

1,750

1,270

Inventory

1,580

1,860

Plant assets

1,900

1,690

Accumulated depreciation

(1,190

)

(1,150

) Long-term investments (held-to-maturity)

1,280

1,400

$7,150

$6,230

Accounts payable

$1,220

$920

Accrued liabilities

210

250

Bonds payable

1,410

1,520

Common stock

1,910

1,730

Retained earnings

2,400

1,810

$7,150

$6,230

BONITA COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017

Sales revenue

$6,930

Cost of goods sold

4,670

Gross margin

2,260

Selling and administrative expenses

940

Income from operations

1,320

Other revenues and gains    Gain on sale of investments

80

Income before tax

1,400

Income tax expense

550

Net income 850 Cash dividends

260

Income retained in business

$590

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2017.

Prepare a statement of cash flows using the direct method. (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

BONITA COMPANY Statement of Cash Flows (Direct Method) Cash Flows from operating activities cash receipts from customers cash paid for merchandise cash paid for selling/admin expenses cash paid for income taxes net cash provided by operating activities cash flows from investing activities sale of plant assets sale of investments net cash provided by investing activities cash flows from financing acitivities payment of cash dividends redemption of bonds payable issuance of capital stock net cash used by financing activities net increase in cash cash at beginning of period cash at end of period noncash investing and financing activities insurance of common stock for plant assets

Explanation / Answer

Workings:

* Since depreciation is not shown separately in the Income Statement it is presumed to be included in the S&A expenses and hence has been deducted from the same here since it is a non-cash expense.

BONITA COMPANY Statement of Cash Flows For the Year Ended December 31, 2017 (Direct Method) Cash Flows from Operating Activities Cash receipts from customers 6450 Cash paid for merchandise 4090 Cash paid for selling/administrative expenses 940 Cash paid for income taxes 550 Net cash provided by operating activities 870 Cash Flows from Investing Activities Purchase of plant assets -140 Sale of investments 200 Net cash provided by investing activities 60 Cash Flows from Financing Activities Redemption of Bonds payable -110 Issuance of Capital stock 110 Payment of cash dividends -260 Net cash used by financing activities -260 Net increase in cash 670 Cash at beginning of period 1160 Cash at end of period 1830 Noncash Investing and Financing Activities Issuance of Common stock for Plant Assets 70

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