(a) Prepare a statement of cash flows for 2017. (Show amounts that decrease cash

Question

(a)

Prepare a statement of cash flows for 2017. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Metlock Corporation’s balance sheet at the end of 2016 included the following items.
Current assets (Cash $82,000) $236,810 Current liabilities $151,810 Land 32,710 Bonds payable 101,810 Buildings 121,810 Common stock 182,710 Equipment 92,710 Retained earnings 46,710 Accum. depr.-buildings (31,810 )     Total $483,040 Accum. depr.-equipment (11,000 ) Patents 41,810     Total $483,040
The following information is available for 2017.
1. Net income was $54,680. 2. Equipment (cost $21,810 and accumulated depreciation $9,810) was sold for $11,810. 3. Depreciation expense was $5,810 on the building and $10,810 on equipment. 4. Patent amortization was $2,500. 5. Current assets other than cash increased by $29,000. Current liabilities increased by $14,810. 6. An addition to the building was completed at a cost of $28,810. 7. A long-term investment (Equity) in stock was purchased for $16,000. 8. Bonds payable of $52,710 were issued. 9. Cash dividends of $30,000 were declared and paid. 10. Treasury stock was purchased at a cost of $11,000.

Explanation / Answer

a.the following is the cash flow statement:

ending cash balance = net cash flow from all acitivities + beginning cash balance =>$38,510 + $82,000 => $120,510.

Amount Amount Cash flow from operations: Net income $54,680 add: loss on sale of equipment (cost - accumulated depreciation - sale price) => (21,810 -9,810 -11,810) $190 add:depreciation (5,810 +10,810) $16,620 add: amortization $2,500 LESS; Increase in current assets ($29,000) add: increase in current liabilities $14,810 net cash flow from operating activities $59,800 cash flow from investing activities: sale of equipment $11,810 additions to building ($28,810) investment in equity (16,000) net cash flow from investing activities ($33,000) cash flow from financing acitivities issue of bonds payable $52,710 cash dividends paid ($30,000) purchase of treasury stock ($11,000) net cash flow from financing acitivities $11,710 net cash flow from all activities (increase in cash) $38,510

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