Question

The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is shown as follows:

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$625,680.00	$586,230.00
4	Accounts receivable (net)	228,100.00	208,850.00
5	Inventories	640,910.00	617,650.00
6	Investments	0.00	240,620.00
7	Land	328,090.00	0.00
8	Equipment	704,540.00	553,320.00
9	Accumulated depreciation-equipment	(166,310.00)	(147,840.00)
10	Total assets	$2,361,010.00	$2,058,830.00
11	Liabilities and Stockholders’ Equity
12	Accounts payable (merchandise creditors)	$425,280.00	$404,550.00
13	Accrued expenses payable (operating expenses)	41,990.00	52,020.00
14	Dividends payable	24,190.00	20,170.00
15	Common stock, $4 par	142,000.00	106,000.00
16	Paid-in capital: Excess of issue price over par—common stock	416,700.00	279,900.00
17	Retained earnings	1,310,850.00	1,196,190.00
18	Total liabilities and stockholders’ equity	$2,361,010.00	$2,058,830.00

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

A.	The investments were sold for $279,190 cash.
B.	Equipment and land were acquired for cash.
C.	There were no disposals of equipment during the year.
D.	The common stock was issued for cash.
E.	There was a $211,240 credit to Retained Earnings for net income.
F.	There was a $96,580 debit to Retained Earnings for cash dividends declared.

Prepare a statement of cash flows, using the indirect method of presenting 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. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section.

Answer 1

Cromme Inc.
A statement of cash flows, using the indirect method
For December 31,2016
Cash flow from Operating activities
Net Income		$211,240.00
Adjustments
Depreciation	$18,470.00
Gain on sale of investments	-$38,570.00
Increase in Accounts receivables (Net)	-$19,250.00
Increase in Inventories	-$23,260.00
Increase in Accounts Payable	$20,730.00
Decrease in Accrued expenses payable	-$10,030.00	-$51,910.00
Net Cash available from Operating activities		$159,330.00
Cash flow from Investing activities
Sale of investments	$279,190.00
Purchase of land	-$328,090.00
Purchase of equipment	-$151,220.00
Net Cash used for Investing activities		-$200,120.00
Cash flow from Financing activities
Issue of common stock	$172,800.00
Dividend paid	-$92,560.00
Net Cash available from Financing activities		$80,240.00
Net Cash Surplus (deficit)		$39,450.00
Add : Cash balance as of Dec.31,2015		$586,230.00
Cash balance as of Dec.31,2016		$625,680.00
Calculation of dividend paid
Dividend payable as of Dec.31,2015	$20,170.00
Add : Dividend declared for 2016	$96,580.00
Less : Dividend payable as of Dec.31,2016	$24,190.00
Dividend Paid during 2016	$92,560.00