Problem 23-4
Blossom Company had the following information available at theend of 2017.
BLOSSOMCOMPANY
COMPARATIVE BALANCE SHEETS
AS OF DECEMBER 31, 2017 AND 2016
2017
2016
Cash $9,930
$4,010
Accounts receivable 20,450
12,910
Short-term investments 22,070
30,030
Inventory 42,300
35,310
Prepaid rent 3,020
12,090
Prepaid insurance 2,090
90
Supplies 1,010
75
Land 124,270
175,470
Buildings 353,500
353,500
Accumulated depreciationâbuildings (105,150
) (87,890
) Equipment 526,140
396,090
Accumulated depreciationâequipment (129,450
) (111,310
) Patents 45,390
49,550
Total assets $915,570
$869,925
Accounts payable $21,800
$32,080
Income taxes payable 5,020
3,970
Salaries and wages payable 4,950
3,000
Short-term notes payable 10,060
10,060
Long-term notes payable 60,060
69,370
Bonds payable 397,380
397,380
Premium on bonds payable 30,200
32,145
Common stock 239,140
221,530
Paid-in capital in excess of parâcommon stock 24,850
17,400
Retained earnings 122,110
82,990
Total liabilities and stockholdersâequity $915,570
$869,925
BLOSSOM COMPANY
INCOME STATEMENT AND DIVIDEND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2017
Sales revenue $1,157,060
Cost of goods sold 748,200
408,860
Gross margin Operating expenses Selling expenses $78,550
Administrative expenses 156,290
Depreciation/Amortization expense 39,560
Total operating expenses 274,400
Income from operations 134,460
Other revenues/expenses Gain on sale of land 7,950
Gain on sale of short-term investment 3,980
Dividend revenue 2,380
Interest expense (51,810
) (37,500
) Income before taxes 96,960
Income tax expense 39,460
Net income 57,500
Dividends to common stockholders (18,380
) To retained earnings $39,120
1 - Prepare a statement of cash flows for Blossom Company using thedirect method accompanied by a reconciliation schedule. Assume theshort-term investments are debt securities, classified asavailable-for-sale. (Show amounts in the investing andfinancing sections that decrease cash flow with either a - signe.g. -15,000 or in parenthesis e.g. (15,000).)
2- Reconciliation Schedule
Problem 23-4
Blossom Company had the following information available at theend of 2017.
BLOSSOMCOMPANY | ||||||
2017 | 2016 | |||||
| Cash | $9,930 | $4,010 | ||||
| Accounts receivable | 20,450 | 12,910 | ||||
| Short-term investments | 22,070 | 30,030 | ||||
| Inventory | 42,300 | 35,310 | ||||
| Prepaid rent | 3,020 | 12,090 | ||||
| Prepaid insurance | 2,090 | 90 | ||||
| Supplies | 1,010 | 75 | ||||
| Land | 124,270 | 175,470 | ||||
| Buildings | 353,500 | 353,500 | ||||
| Accumulated depreciationâbuildings | (105,150 | ) | (87,890 | ) | ||
| Equipment | 526,140 | 396,090 | ||||
| Accumulated depreciationâequipment | (129,450 | ) | (111,310 | ) | ||
| Patents | 45,390 | 49,550 | ||||
| Total assets | $915,570 | $869,925 | ||||
| Accounts payable | $21,800 | $32,080 | ||||
| Income taxes payable | 5,020 | 3,970 | ||||
| Salaries and wages payable | 4,950 | 3,000 | ||||
| Short-term notes payable | 10,060 | 10,060 | ||||
| Long-term notes payable | 60,060 | 69,370 | ||||
| Bonds payable | 397,380 | 397,380 | ||||
| Premium on bonds payable | 30,200 | 32,145 | ||||
| Common stock | 239,140 | 221,530 | ||||
| Paid-in capital in excess of parâcommon stock | 24,850 | 17,400 | ||||
| Retained earnings | 122,110 | 82,990 | ||||
| Total liabilities and stockholdersâequity | $915,570 | $869,925 | ||||
BLOSSOM COMPANY | ||||||
| Sales revenue | $1,157,060 | |||||
| Cost of goods sold | 748,200 | |||||
408,860 | ||||||
| Gross margin | ||||||
| Operating expenses | ||||||
| Selling expenses | $78,550 | |||||
| Administrative expenses | 156,290 | |||||
| Depreciation/Amortization expense | 39,560 | |||||
| Total operating expenses | 274,400 | |||||
| Income from operations | 134,460 | |||||
| Other revenues/expenses | ||||||
| Gain on sale of land | 7,950 | |||||
| Gain on sale of short-term investment | 3,980 | |||||
| Dividend revenue | 2,380 | |||||
| Interest expense | (51,810 | ) | (37,500 | ) | ||
| Income before taxes | 96,960 | |||||
| Income tax expense | 39,460 | |||||
| Net income | 57,500 | |||||
| Dividends to common stockholders | (18,380 | ) | ||||
| To retained earnings | $39,120 | |||||
1 - Prepare a statement of cash flows for Blossom Company using thedirect method accompanied by a reconciliation schedule. Assume theshort-term investments are debt securities, classified asavailable-for-sale. (Show amounts in the investing andfinancing sections that decrease cash flow with either a - signe.g. -15,000 or in parenthesis e.g. (15,000).)
2- Reconciliation Schedule
