Exercise 23-16 The balance sheet data of Bridgeport Company at the end of 2017 a
ID: 2597985 • Letter: E
Question
Exercise 23-16
The balance sheet data of Bridgeport Company at the end of 2017 and 2016 are shown below.
2017
2016
$30,300
$35,200
54,900
45,400
65,400
44,600
14,900
25,200
89,400
74,800
(17,880
(8,000
70,200
39,600
$307,220
$256,800
$64,900
$52,500
14,900
17,800
–0–
23,300
30,000
–0–
190,600
160,000
6,820
3,200
$307,220
$256,800
Land was acquired for $30,600 in exchange for common stock, par $30,600, during the year; all equipment purchased was for cash. Equipment costing $13,000 was sold for $3,000; book value of the equipment was $6,000. Cash dividends of $10,000 were declared and paid during the year.
Compute net cash provided (used) by: (Show amounts that decrease cash flow with either a - sign e.g. -12,000 or in parenthesis e.g. (12,000).)
2017
2016
Cash$30,300
$35,200
Accounts receivable (net)54,900
45,400
Inventory65,400
44,600
Prepaid expenses14,900
25,200
Equipment89,400
74,800
Accumulated depreciation—equipment(17,880
)(8,000
) Land70,200
39,600
$307,220
$256,800
Accounts payable$64,900
$52,500
Accrued expenses14,900
17,800
Notes payable—bank, long-term–0–
23,300
Bonds payable30,000
–0–
Common stock, $10 par190,600
160,000
Retained earnings6,820
3,200
$307,220
$256,800
Explanation / Answer
STATEMENT OF CASH FLOW Amount in $ Amount in $ Net income $ 13,620 Cash flows from operating activities Adjustments for: Depreciation of the year $ 16,880 Gain on Sale of investments Loss on sale of Equipment $ 3,000 $ 19,880 Effects/ changes in Assets & Liabilities (Increase) / Decrease in Account receivables $ -9,500 Inventory Decrease / (Increase) $ -20,800 Prepaid Expenses $ 10,300 Dividend Receivable Accounts payable Increase / ( Decrese) $ 12,400 Accrued Expenses $ -2,900 Income tax Payable Interest Payable $ -10,500 Net cash from operating activities $ 23,000 Cash flows from investing activities Purchase of Equipment $ -27,600 Sale of Equipment $ 3,000 Long Term Investment in Byrd Net cash used in investing activities $ -24,600 Cash flows from Financing activities Repayment of Note Payable $ -23,300 Issue of Bonds $ 30,000 Dividend Paid $ -10,000 Issue of common Stock ($ 1920 - $ 1690 -$ 70) Net cash used in financing activities $ -3,300 Net increase in cash and cash equivalents $ -4,900 Add :Cash and cash equivalents at beginning of period $ 35,200 Cash and cash equivalents at end of period $ 30,300 Working Notes: $ - 1) CALCULATION OF LOSS ON SALE OF EQUIPMET Book Value of Equipment $ 6,000 Less : Sale Value of Equipment $ 3,000 Loss on Sale of Equipmet = $ 3,000 2) Calculation of the Purchase of Equipment Opening Value of Equipment $ 74,800 Less : Sold $ -13,000 Net Balance $ 61,800 Closing Value of Equipment $ 89,400 Purchase Value of the Equipment $ 27,600 3 ) Calculation of Depreciation Opening Value of Depreciation = $ 8,000 Less: Depreciation of Sale of Equipment = $ 7,000 Net Value = $ 1,000 Closing Balance= $ 17,880 Closing Balance - Net Value = Depreciation $ 16,880
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