QS 12-19 Indirect: Preparing statement of cash flows LO P1, P2, P3

MONTGOMERY INC. Comparative Balance Sheets December 31, 2018 and 2017
		2018			2017
Assets
Cash	$	33,200		$	33,400
Accounts receivable, net		12,100			14,700
Inventory		108,500			84,900
Total current assets		153,800			133,000
Equipment		60,100			50,200
Accum. depreciationâEquipment		(27,100	)		(18,500	)
Total assets	$	186,800		$	164,700
Liabilities and Equity
Accounts payable	$	28,800		$	30,700
Salaries payable		600			700
Total current liabilities		29,400			31,400
Equity
Common stock, no par value		130,000			118,100
Retained earnings		27,400			15,200
Total liabilities and equity	$	186,800		$	164,700

MONTGOMERY INC. Income Statement For Year Ended December 31, 2018
Sales			$	53,500
Cost of goods sold				(22,200	)
Gross profit				31,300
Operating expenses
Depreciation expense	$	8,600
Other expenses		6,600
Total operating expense				15,200
Income before taxes				16,100
Income tax expense				3,900
Net income			$	12,200

Additional Information

No dividends are declared or paid in 2018.

Issued additional stock for $11,900 cash in 2018.

Purchased equipment for cash in 2018; no equipment was sold in 2018.

1. Use the above financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2018, using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

MONTGOMERY, INC.
Statement of Cash Flows (Indirect Method)
For Year Ended December 31, 2018
Cash flows from operating activities

Adjustments to reconcile net income to net cash provided by operations:
Changes in current operating assets and liabilities






		$0
Cash flows from investing activities


		0
Cash flows from financing activities


		0
		$0
Cash balance at beginning of year
Cash balance at end of year		$0

The comparative balance sheet of Canace Products Inc. forDecember 31, 2016 and 2015, is shown as follows:

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$643,460.00	$679,530.00
4	Accounts receivable (net)	566,490.00	548,320.00
5	Inventories	1,010,720.00	982,600.00
6	Investments	0.00	240,910.00
7	Land	519,510.00	0.00
8	Equipment	879,710.00	680,990.00
9	Accumulated depreciation-equipment	(243,750.00)	(200,970.00)
10	Total assets	$3,376,140.00	$2,931,380.00
11	Liabilities and Stockholdersâ Equity
12	Accounts payable (merchandise creditors)	$772,290.00	$748,770.00
13	Accrued expenses payable (operating expenses)	63,970.00	69,800.00
14	Dividends payable	8,000.00	7,040.00
15	Common stock, $2 par	56,000.00	32,000.00
16	Paid-in capital: Excess of issue price over parâcommon stock	408,000.00	192,000.00
17	Retained earnings	2,067,880.00	1,881,770.00
18	Total liabilities and stockholdersâ equity	$3,376,140.00	$2,931,380.00

The income statement for the year ended December 31, 2016, is asfollows:

1	Sales		$5,974,620.00
2	Cost of merchandise sold		2,451,470.00
3	Gross profit		$3,523,150.00
4	Operating expenses:
5	Depreciation expense	$42,780.00
6	Other operating expenses	3,099,440.00
7	Total operating expenses		3,142,220.00
8	Operating income		$380,930.00
9	Other expense:
10	Loss on sale of investments		(64,890.00)
11	Income before income tax		$316,040.00
12	Income tax expense		102,160.00
13	Net income		$213,880.00

Additional data obtained from an examination of the accounts inthe ledger for 2016 are as follows:

A.	Equipment and land were acquired for cash.
B.	There were no disposals of equipment during the year.
C.	The investments were sold for $176,020 cash
D.	The common stock was issued for cash.
E.	There was a $27,770 debit to Retained Earnings for cashdividends declared.

Prepare a statement of cash flows, using the direct method ofpresenting cash flows from operating activities. Be sure tocomplete the heading of the statement. Refer to the Labels andAmount Descriptions list provided for the exact wording of theanswer choices for text entries. Use the minus sign only toindicate the net cash outflows for each section. âDeductâ, âLessâor colons (:) will automatically appear if required.

Labels and Amount Descriptions

Cash paid for dividends

Cash paid for purchase of equipment

Cash paid for purchase of land

Cash paid for purchase of treasury stock

Cash payments for income taxes

Cash payments for merchandise

Cash payments for operating expenses

Cash received from customers

Cash received from sale of common stock

Cash received from sale of investments

December 31, 2016

Decrease in cash

Depreciation

For the Year Ended December 31, 2016

Gain on sale of investments

Increase in cash

Issuance of common stock for acquisition of land

Issuance of common stock for purchase of equipment

Loss on sale of investments

Net cash flow from financing activities

Net cash flow from investing activities

Net cash flow from operating activities

Net cash flow used for financing activities

Net cash flow used for investing activities

Net cash flow used for operating activities

Prepare a statement of cash flows, using the direct method ofpresenting cash flows from operating activities. Be sure tocomplete the heading of the statement. Refer to the Labels andAmount Descriptions list provided for the exact wording of theanswer choices for text entries. Use the minus sign only toindicate the net cash outflows for each section. âDeductâ, âLessâor colons (:) will automatically appear if required.

Canace Products Inc.

Statement of Cash Flows

1	Cash flows from operating activities:
2
3
4
5
6
7
8	Cash flows from investing activities:
9
10
11
12
13
14	Cash flows from financing activities:
15
16
17
18
19	Cash at the beginning of the year
20	Cash at the end of the year

blushmarten502

The comparative balance sheet of Del Ray Enterprises Inc. atDecember 31, 2016 and 2015, is as follows:

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$146,600.00	$179,800.00
4	Accounts receivable (net)	224,600.00	242,000.00
5	Merchandise inventory	321,600.00	299,200.00
6	Prepaid expenses	13,400.00	9,600.00
7	Equipment	655,000.00	537,000.00
8	Accumulated depreciation-equipment	(170,800.00)	(132,200.00)
9	Total assets	$1,190,400.00	$1,135,400.00
10	Liabilities and Stockholdersâ Equity
11	Accounts payable (merchandise creditors)	$250,200.00	$237,600.00
12	Mortgage note payable	ââââ0.00	336,000.00
13	Common stock, $10 par	74,000.00	24,000.00
14	Paid-in capital: Excess of issue price over parâcommon stock	âââ470,000.00	320,000.00
15	Retained earnings	396,200.00	217,800.00
16	Total liabilities and stockholdersâ equity	$1,190,400.00	$1,135,400.00

Additional data obtained from the income statement and from anexamination of the accounts in the ledger for 2016 are asfollows:

A.	Net income, $332,000
B.	Depreciation reported on the income statement, $83,400
C.	Equipment was purchased at a cost of $162,800 and fullydepreciated equipment costing $44,800 was discarded, with nosalvage realized.
D.	The mortgage note payable was not due until 2018 but the termspermitted earlier payment without penalty.
E.	10,000 shares of common stock were issued at $20 for cash.
F.	Cash dividends declared and paid, $153,600

Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities. Refer to theLabels and Amount Descriptions list provided for the exact wordingof the answer choices for text entries. Be sure to complete theheading of the statement. In the operating activities section, usethe minus sign to indicate cash outflows, decreases in cash and anet cash outflow, if required. In the investing and financingactivities section, use a minus sign only to indicate a NET cashoutflow for the section.

I have the statement of cash flows, but I need help with thespreadsheet (worksheet) for statement of cash flows.

DEL RAY ENTERPRISES INC.

Statement of Cash Flows

For the Year Ended December 31, 2016

Cash flows from operating activities:

Net income

$ 332,000

Adjustments to reconcile net income to net cash

flow from operating activities:

Depreciation

83,400

Changes in current operating assets and liabilities:

Decrease in accounts receivable

17,400

Increase in merchandise inventory

(22,400)

Increase in prepaid expenses

(3,800)

Increase in accounts payable

12,600

Net cash flow from operating activities

$ 419,200

Cash flows from investing activities:

Less cash paid for purchase of equipment

$ (162,800)

Net cash flow used for investing activities

(162,800)

Cash flows from financing activities:

Cash received from sale of common stock

$ 200,000

Less cash paid for dividends

(153,600)

Less cash paid to retire mortgage note payable

(336,000)

Net cash flow used for financing activities

(289,600)

Increase (decrease) in cash

$ (33,200)

Cash at the beginning of the year

179,800

Cash at the end of the year

$ 146,600

DEL RAY ENTERPRISES INC.

Spreadsheet (Work Sheet) for Statement of CashFlows

For the Year Ended December 31, 2016

Balance,

Transactions

Balance,

Dec. 31, 2015

Debit

Credit

Dec. 31, 2016

Cash

179,800

146,600

Accounts receivable (net)

242,000

224,600

Merchandise inventory

299,200

321,600

Prepaid expenses

9,600

13,400

Equipment

537,000

655,000

Accum. depr. - equipment

(132,200)

(170,800)

Accounts payable

(237,600)

(250,200)

Mortgage note payable

(336,000)

-

Common stock, $25 par

(24,000)

(74,000)

Paid-in capital in excess of par

(320,000)

(470,000)

Retained earnings

(217,800)

(396,200)

Totals

-

Operating activities:

Net income

Depreciation

Decrease in accounts receivable

Increase in merchandise inventory

Increase in prepaid expenses

Increase in accounts payable

Investing activities:

Purchase of equipment

Financing activities:

Payment of cash dividends

Sale of common stock

Payment of mortgage note payable

Net decrease in cash

Totals

erinduck149

ACCOUNTG 221 Chapter Notes - Chapter 4: Current Asset, Retained Earnings

Document Summary

Get access

Related Documents

ACCOUNTG 221 Lecture Notes - Lecture 3: Retained Earnings, Net Income, Financial Statement

ACCOUNTG 221 Lecture Notes - Lecture 4: Retained Earnings, Income Statement

ACCOUNTG 221 Lecture Notes - Lecture 2: Gross Margin, Net Income, Income Statement

Related Questions