The net income reported on the income statement for the currentyear was $364,000. Depreciation recorded on store equipment for theyear amounted to $14,500. Balances of the current asset and currentliability accounts at the beginning and end of the year are asfollows:
End of Year
Beginning of Year
Cash $43,210 $38,400 Accounts receivable (net) 31,360 29,020 Merchandise inventory 39,590 45,160 Prepaid expenses 4,740 3,670 Accounts payable (merchandise creditors) 41,480 35,590 Wages payable 21,910 22,970
Required:
A. Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Refer to theAmount Descriptions list provided for the exact wording of theanswer choices for text entries. Use the minus sign to indicatecash outflows, cash payments, decreases in cash and for anyadjustments, if required. B
Amount Descriptions
Amortization of intangible assets Decrease in accounts payable Decrease in accounts receivable Decrease in merchandise inventory Decrease in prepaid expenses Decrease in wages payable Depreciation Increase in accounts payable Increase in accounts receivable Increase in merchandise inventory Increase in prepaid expenses Increase in wages payable Net cash flow from operating activities Net cash flow used for operating activities Net income Net loss
A. Prepare the Cash Flows from Operating Activities section ofthe statement of cash flows, using the indirect method. Refer tothe Amount Descriptions list provided for the exact wording of theanswer choices for text entries. Use the minus sign to indicatecash outflows, cash payments, decreases in cash and for anyadjustments, if required.
Statement of Cash Flows (partial)
1
Cash flows from operatinactivities:
2
3
Adjustments to reconcile net income to net cash flow fromoperating activities:
4
5
Changes in current operating assets and liabilities:
6
7
8
9
10
11
The net income reported on the income statement for the currentyear was $364,000. Depreciation recorded on store equipment for theyear amounted to $14,500. Balances of the current asset and currentliability accounts at the beginning and end of the year are asfollows:
End of Year | Beginning of Year | |
|---|---|---|
| Cash | $43,210 | $38,400 |
| Accounts receivable (net) | 31,360 | 29,020 |
| Merchandise inventory | 39,590 | 45,160 |
| Prepaid expenses | 4,740 | 3,670 |
| Accounts payable (merchandise creditors) | 41,480 | 35,590 |
| Wages payable | 21,910 | 22,970 |
Required:
| A. | Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Refer to theAmount Descriptions list provided for the exact wording of theanswer choices for text entries. Use the minus sign to indicatecash outflows, cash payments, decreases in cash and for anyadjustments, if required. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B
|
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The comparative balance sheets of Posner Company, for Years 1 and 2 ended December 31, appear below in condensed form.
| 1 | Year 2 | Year 1 | |
| 2 | Cash | $53,000.00 | $50,000.00 |
| 3 | Accounts Receivable (net) | 37,000.00 | 48,000.00 |
| 4 | Inventories | 108,500.00 | 100,000.00 |
| 5 | Investments | 70,000.00 | |
| 6 | Equipment | 573,200.00 | 450,000.00 |
| 7 | Accumulated Depreciation-Equipment | (142,000.00) | (176,000.00) |
| 8 | $629,700.00 | $542,000.00 | |
| 9 | Accounts Payable | $62,500.00 | $43,800.00 |
| 10 | Bonds Payable, Due Year 2 | 100,000.00 | |
| 11 | Common Stock, $10 par | 325,000.00 | 285,000.00 |
| 12 | Paid-In Capital in Excess of ParâCommon Stock | 80,000.00 | 55,000.00 |
| 13 | Retained Earnings | 162,200.00 | 58,200.00 |
| 14 | $629,700.00 | $542,000.00 |
The income statement for the current year is as follows:
| 1 | Sales | $625,700.00 | |
| 2 | Cost of merchandise sold | 340,000.00 | |
| 3 | Gross profit | $285,700.00 | |
| 4 | Operating expenses: | ||
| 5 | Depreciation expense | $26,000.00 | |
| 6 | Other operating expenses | 68,000.00 | 94,000.00 |
| 7 | Income from operations | $191,700.00 | |
| 8 | Other revenue and expense: | ||
| 9 | Gain on sale of investment | $4,000.00 | |
| 10 | Interest expense | (6,000.00) | (2,000.00) |
| 11 | Income before income tax | $189,700.00 | |
| 12 | Income tax | 60,700.00 | |
| 13 | Net income | $129,000.00 |
Additional data for the current year are as follows:
| (a) | Fully depreciated equipment costing $60,000 was scrapped, no salvage, and new equipment was purchased for $183,200. |
| (b) | Bonds payable for $100,000 were retired by payment at their face amount. |
| (c) | 5,000 shares of common stock were issued at $13 for cash. |
| (d) | Cash dividends declared and paid, $25,000. |
Required:
| Prepare a statement of cash flows using the indirect method of reporting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. |
Labels and Amount Descriptions
| Labels | |
| For the Year Ended December 31, Year 2 | |
| Amount Descriptions | |
| Cash from sale of common stock | |
| Cash from sale of investments | |
| Cash paid for dividends | |
| Cash paid for purchase of equipment | |
| Cash paid to retire bonds payable | |
| Decrease in accounts payable | |
| Decrease in accounts receivable | |
| Decrease in cash | |
| Decrease in inventories | |
| Depreciation | |
| Gain on sale of investment | |
| Increase in accounts payable | |
| Increase in accounts receivable | |
| Increase in cash | |
| Increase in inventories | |
| Loss on sale of investment | |
| 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 | |
| Net income | |
| Net loss |
Statement of Cash Flows
Prepare a statement of cash flows using the indirect method of reporting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
| Posner Company |
| Statement of Cash Flows |
| 1 | Cash flows from operating activities: | ||
| 2 | |||
| 3 | Adjustments to reconcile net income to net cash flow from operating activities: | ||
| 4 | |||
| 5 | |||
| 6 | Changes in current operating assets and liabilities: | ||
| 7 | |||
| 8 | |||
| 9 | |||
| 10 | |||
| 11 | Cash flows from investing activities: | ||
| 12 | |||
| 13 | |||
| 14 | |||
| 15 | Cash flows from financing activities: | ||
| 16 | |||
| 17 | |||
| 18 | |||
| 19 | |||
| 20 | |||
| 21 | Cash at the beginning of the year | ||
| 22 | Cash at the end of the year |
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 | |||||||||||||||
