Here is the information you will need to prepare a 2018statement of cash flows for J. OâBrien Real Estate for the yearended October 31, 2018.
The cash balance was $21,000 at the beginning of 2018
Cashincrease 79,000
Netincome 78,000
Depreciationexpense 15,000
Issuance of commonstock 28,000
Sale of plantassets 5,000
From loan repayment byborrower 12,000
Purchase of stockinvestment 22,000
Paid dividends tostockholders 45,000
Accounts receivabledecrease 12,000
Inventoryincrease 9,000
Accounts payabledecrease 3,000
Accrued liabilitiesincrease 8,000
J. OâBRIEN REAL ESTATE
Statement of Cash Flows
For Year Ended October 31, 2018
Net cash flow from operating activities
Net Income
Depreciation
Accounts receivable decrease
Inventory increase
Accounts payable decrease
Accrued liabilities increase
Net cash provided by operating activities
Cash flow from investing activities
Sale of stock plant assets
Loan repayment by borrower
Purchase of stock investment
Net cash used by investing activities
Cash flow from financing activities
Issuance of common stock
Payment of dividends
Net cash provided by financing activities
Net increase in cash
Cash at beginning of year
Cash at end of year
Here is the information you will need to prepare a 2018statement of cash flows for J. OâBrien Real Estate for the yearended October 31, 2018.
The cash balance was $21,000 at the beginning of 2018
Cashincrease 79,000
Netincome 78,000
Depreciationexpense 15,000
Issuance of commonstock 28,000
Sale of plantassets 5,000
From loan repayment byborrower 12,000
Purchase of stockinvestment 22,000
Paid dividends tostockholders 45,000
Accounts receivabledecrease 12,000
Inventoryincrease 9,000
Accounts payabledecrease 3,000
Accrued liabilitiesincrease 8,000
| J. OâBRIEN REAL ESTATE Statement of Cash Flows For Year Ended October 31, 2018 | ||
Net cash flow from operating activities | ||
Net Income | ||
Depreciation | ||
Accounts receivable decrease | ||
Inventory increase | ||
Accounts payable decrease | ||
Accrued liabilities increase | ||
Net cash provided by operating activities | ||
Cash flow from investing activities | ||
Sale of stock plant assets | ||
Loan repayment by borrower | ||
Purchase of stock investment | ||
Net cash used by investing activities | ||
Cash flow from financing activities | ||
Issuance of common stock | ||
Payment of dividends | ||
Net cash provided by financing activities | ||
Net increase in cash | ||
Cash at beginning of year | ||
Cash at end of year | ||
Related questions
| The following changes took placelast year in Herald Companyâs balance sheet accounts: |
| Asset and Contra-Asset Accounts | Liabilities and Equity Accounts | ||||||
| Cash | $ | 46 | I | Accounts payable | $ | 23 | I |
| Accountsreceivable | $ | 13 | D | Accrued liabilities | $ | 9 | D |
| Inventory | $ | 26 | I | Income taxes payable | $ | 11 | I |
| Prepaidexpenses | $ | 5 | D | Bonds payable | $ | 17 | D |
| Long-terminvestments | $ | 29 | D | Common stock | $ | 43 | I |
| Property, plant, andequipment | $ | 148 | I | Retained earnings | $ | 47 | I |
| Accumulateddepreciation | $ | 45 | I | ||||
| D = Decrease; I = Increase. |
Long-term investments that hadcost the company $50 were sold during the year for $45, and landthat had cost $30 was sold for $71. In addition, the companydeclared and paid $35 in cash dividends during the year. Besidesthe sale of land, no other sales or retirements of plant andequipment took place during the year. Herald did not issue anybonds during the year or repurchase any of its own stock. |
| The companyâs income statementfor the year follows: |
| Sales | $ | 602 | ||
| Cost of goodssold | 248 | |||
| Gross margin | 354 | |||
| Selling andadministrative expenses | 279 | |||
| Net operatingincome | 75 | |||
| Nonoperatingitems: | ||||
| Loss on sale ofinvestments | $ | (5) | ||
| Gain on sale ofland | 41 | 36 | ||
| Income beforetaxes | 111 | |||
| Income taxes | 29 | |||
| Net income | $ | 82 | ||
| The companyâs beginning cashbalance was $100 and its ending balance was $146. |
| Required: |
Use the direct method to convert the company's income statementto a cash basis. (Adjustment amounts that are to bededucted and Net cash "used in" operating activities should beindicated with a minus sign and all other amounts as positivevalues.) |
| Herald Companyâs Direct Method of Determining the Net Cash flows from Operatingactivities | ||
| Sales | $ | |
| Adjustments to a cash basis: | ||
| (Click to select)Loss onsale of investmentsDecrease in accrued liabilitiesIncrease ininventoryIncrease in income taxes payableIncrease in prepaidexpensesIncrease in accounts receivableIncrease in accruedliabilitiesDecrease in accounts receivableGain on sale oflandIncrease in accounts payableDecrease in accountspayableDecrease in prepaid expensesDecrease ininventoryDepreciationDecrease in income taxes payable | $ | |
| Cost of goodssold | ||
| Adjustments to a cash basis: | ||
| (Click to select)Increasein accounts payableDecrease in accrued liabilitiesIncrease inaccrued liabilitiesDecrease in inventoryIncrease in prepaidexpensesGain on sale of landIncrease in accountsreceivableDepreciationIncrease in inventoryDecrease in accountspayableDecrease in accounts receivableLoss on sale ofinvestmentsIncrease in income taxes payableDecrease in prepaidexpensesDecrease in income taxes payable | ||
| (Click to select)Increasein accounts receivableIncrease in accounts payableDecrease inincome taxes payableDecrease in accrued liabilitiesDecrease inaccounts payableGain on sale of landIncrease in income taxespayableIncrease in inventoryIncrease in accruedliabilitiesDepreciationLoss on sale of investmentsDecrease ininventoryIncrease in prepaid expensesDecrease in accountsreceivableDecrease in prepaid expenses | ||
| Selling andadministrative expenses | ||
| Adjustments to a cash basis: | ||
| (Click to select)Loss onsale of investmentsDecrease in accounts receivableIncrease ininventoryDecrease in accrued liabilitiesDecrease ininventoryDecrease in income taxes payableDepreciationGain on saleof landIncrease in income taxes payableDecrease in accountspayableIncrease in accounts receivableIncrease in accountspayableDecrease in prepaid expensesIncrease in accruedliabilitiesIncrease in prepaid expenses | ||
| (Click to select)Increasein inventoryDecrease in income taxes payableDecrease in accountsreceivableGain on sale of landIncrease in income taxes payableLosson sale of investmentsDepreciationDecrease in prepaidexpensesDecrease in accrued liabilitiesIncrease in prepaidexpensesIncrease in accounts receivableDecrease in accountspayableIncrease in accounts payableIncrease in accruedliabilitiesDecrease in inventory | ||
| (Click to select)Loss onsale of investmentsDecrease in prepaid expensesDecrease ininventoryIncrease in inventoryIncrease in accruedliabilitiesIncrease in prepaid expensesIncrease in accountsreceivableDecrease in income taxes payableDepreciationIncrease inaccounts payableDecrease in accounts payableDecrease in accruedliabilitiesDecrease in accounts receivableIncrease in income taxespayableGain on sale of land | ||
| Income taxes | ||
| Adjustments to a cash basis: | ||
| (Click to select)Increasein inventoryDecrease in income taxes payableDecrease ininventoryIncrease in income taxes payableIncrease in prepaidexpensesGain on sale of landDecrease in accounts receivableDecreasein accounts payableDepreciationIncrease in accounts receivableLosson sale of investmentsDecrease in prepaid expensesIncrease inaccounts payableDecrease in accrued liabilitiesIncrease in accruedliabilities | ||
| Net cash (Click toselect)provided byused for operating activities | $ | |
Statement of Cash FlowsâIndirect Method
The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows:
| Dec. 31, 20Y9 | Dec. 31, 20Y8 | ||||
| Assets | |||||
| Cash | $245,600 | $227,150 | |||
| Accounts receivable (net) | 88,970 | 81,580 | |||
| Inventories | 251,170 | 241,550 | |||
| Investments | 0 | 93,580 | |||
| Land | 128,820 | 0 | |||
| Equipment | 277,110 | 213,550 | |||
| Accumulated depreciationâequipment | (64,880) | (57,590) | |||
| Total assets | $926,790 | $799,820 | |||
| Liabilities and Stockholders' Equity | |||||
| Accounts payable | $167,750 | $157,560 | |||
| Accrued expenses payable | 16,680 | 20,800 | |||
| Dividends payable | 9,270 | 7,200 | |||
| Common stock, $10 par | 50,050 | 39,190 | |||
| Paid-in capital: Excess of issue price over par-common stock | 188,140 | 108,780 | |||
| Retained earnings | 494,900 | 466,290 | |||
| Total liabilities and stockholdersâ equity | $926,790 | $799,820 | |||
Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:
Equipment and land were acquired for cash.
There were no disposals of equipment during the year.
The investments were sold for $84,220 cash.
The common stock was issued for cash.
There was a $66,200 credit to Retained Earnings for net income.
There was a $37,590 debit to Retained Earnings for cash dividends declared.
Required:
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.
| Merrick Equipment Co. | ||
| Statement of Cash Flows | ||
| For the Year Ended December 31, 20Y9 | ||
| Cash flows from operating activities: | ||
| Net income | $ | |
| Adjustments to reconcile net income to net cash flow from operating activities: | ||
| Depreciation | ||
| Loss on sale of investments | ||
| Changes in current operating assets and liabilities: | ||
| Increase in accounts receivable | ||
| Increase in inventories | ||
| Increase in accounts payable | ||
| Decrease in accrued expenses payable | ||
| Net cash flow from operating activities | $ | |
| Cash flows from (used for) investing activities: | ||
| Cash from sale of investments | $ | |
| Cash used for purchase of land | ||
| Cash used for purchase of equipment | ||
| Net cash flow used for investing activities | ||
| Cash flows from (used for) financing activities: | ||
| Cash from sale of common stock | ||
| Cash used for dividends | ||
| Net cash flow from financing activities | ||
| Increase in cash | $ | |
| Cash at the beginning of the year | ||
| Cash at the end of the year | $ | |
