Question

Marcus Inc. reported the following Income Statement for 2018 and the comparative balance sheet for 2018 and 2017, along with additional information for 2018.
Prepare Maynard's statement of cash flows for the year ended December 31, 2018 using the indirect method and follow the proper format.
MARCUS INC.
Comparative Balance Sheets
12/31/2018
Assets	2018	2017
Debit Accounts
Cash	42,000	33,750
Accounts receivable	70,500	60,000
Inventory	30,000	24,000
Investments (available for sale)	22,250	38,500
Machinery	30,000	18,750
Buildings	67,500	56,250
Land	7,500	7,500
	269,750	238,750
Credit Accounts
Allowance for Doubtful Accounts	2,250	1,500
Accumulated depreciation - Machinery	5,625	2,250
Accumulated depreciation - Buildings	13,500	9,000
Accounts payable	35,000	24,750
Accrued payables	3,375	2,625
Long-Term Notes Payable	21,000	31,000
Common stock - no-par	150,000	125,000
Retained earnings	39,000	42,625
Total liabilities and stockholders' equity	269,750	238,750
Marcus' 2018 income statement follows (ignoring taxes)
Sales revenue			$540,000
Less: Cost of goods sold			380,000
Gross Margin			160,000
Less: Operating expenses (includes $8625 depreciation and $5,400 bad debts)			120,450
Income from operations			39,550
Other: Gain on sale of innvestments		3,750
Loss on sale of machinery		-800
			2,950
Net income			42,500
Additional information for 2018:
·         1. Net income for the year was $42,500
·         2. Cash dividend declared and paid during the year were $21,125
·         3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized.
·         4. Investments that cost $25,000 were sold during the year for $28,750
·         5. Machinery that cost $3,750, on which $750 of depreciation had accumulated was sold for $2,200

Answer 1

Solution:

Marcus Inc.
Statement of Cash Flows
For the year ended December 31, 2018
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income	$42,500.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$8,625.00
Gain on sale of equipment	-$3,750.00
Loss on sale of Machinery	$800.00
Increase in net accounts receivables [($70,500 - $2,250) - ($60,000 - $1,500)]	-$9,750.00
Increase in inventory ($30,000 - $24,000)	-$6,000.00
Increase in accounts payable ($35,000 - $24,750)	$10,250.00
Increase in accrued payable ($3,375 - $2,625)	$750.00
Net Cash provided by operating activities		$43,425.00
Cash Flow from Investing Activities:
Proceed from sale of investment	$28,750.00
Proceed from sale of Machinery	$2,200.00
Purchase of investment ($22,250 - $38,500 + $25,000)	-$8,750.00
Purchase of machinery ($30,000 - $18,750 + $3,750)	-$15,000.00
Purchase of Building ($67,500 - $56,250)	-$11,250.00
Net Cash used in Investing activities		-$4,050.00
Cash Flow from Financing Activities:
Repayment of long term note	-$10,000.00
Dividend Paid	-$21,125.00
Net Cash Provided by financing activities		-$31,125.00
Net Increase / (Decrease) in Cash		$8,250.00
Cash balance at beginning of year		$33,750.00
Cash balance at end of year		$42,000.00