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A comparative balance sheet for Talkington Corporation is presented below. December 31 Assets 2017 2016 Cash...

A comparative balance sheet for Talkington Corporation is presented below.

December 31
Assets 2017 2016
Cash $68,000 $22,000
Accounts receivable 82,000 66,000
Inventory 170,000 189,000
Land 71,000 110,000
Equipment 280,000 200,000
Accumulated depreciation–equipment (74,000) (42,000)
            Total $597,000 $545,000
Liabilities and Stockholders’ Equity
Accounts payable $34,000 $47,000
Bonds payable 150,000 200,000
Common stock ($1 par) 164,000 164,000
Retained earnings 249,000 134,000
            Total $597,000 $545,000


Additional information:

1. Net income for 2017 was $155,000; there were no gains or losses.
2. Cash dividends of $40,000 were declared and paid.
3. Bonds payable of $50,000 were retired.


Compute each of the following:

1. Net cash provided by operating activities $
2. Net cash provided (used) by investing activities $
3. Net cash provided (used) by financing activities $

Solutions

Expert Solution

1. Net cash provided by operating activities 177000
2. Net cash provided (used) by investing activities (41000)
3. Net cash provided (used) by financing activities (90000)
Workings:
Cash Flows from Operating Activities:
Net income 155000
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense 32000
Increase in Accounts receivable -16000
Decrease in inventory 19000
Decrease in accounts payable -13000
22000
Net cash provided by operating activities 177000
Cash Flows from Investing Activities:
Purchase of Equipment -80000
Sale of Land 39000
Net Cash used by Investing Activities -41000
Cash Flows from Financing Activities
Payment of Cash Dividends -40000
Redemption of Bonds Payable -50000
Net Cash Used by Financing Activities -90000
Net Increase in Cash 46000
Cash at Beginning of Period 22000
Cash at End of Period 68000

ekkarill92 answered 2 years ago
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