Question

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

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$146,480.00	$179,640.00
4	Accounts receivable (net)	225,010.00	241,920.00
5	Merchandise inventory	321,600.00	298,870.00
6	Prepaid expenses	13,030.00	10,420.00
7	Equipment	654,380.00	537,900.00
8	Accumulated depreciation-equipment	(169,970.00)	(133,130.00)
9	Total assets	$1,190,530.00	$1,135,620.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$250,960.00	$236,720.00
12	Mortgage note payable	0.00	335,410.00
13	Common stock, $10 par	75,000.00	25,000.00
14	Paid-in capital: Excess of issue price over par—common stock	440,000.00	310,000.00
15	Retained earnings	424,570.00	228,490.00
16	Total liabilities and stockholders’ equity	$1,190,530.00	$1,135,620.00

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

A.	Net income, $348,560
B.	Depreciation reported on the income statement, $82,480
C.	Equipment was purchased at a cost of $162,120 and fully depreciated equipment costing $45,640 was discarded, with no salvage realized.
D.	10,000 shares of common stock were issued at $18 for cash.
E.	The mortgage note payable was not due until 2018 but the terms permitted earlier payment without penalty.
F.	Cash dividends declared and paid, $152,480

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 and enter in the order listed on the Instructions page.

Answer 1

Del Ray Emterprises Inc
Statement of Cash flows
For the Year Ended December 31, 2016
Cash flows from operating activities
Net Income		$   348,560
Adjustments to reconcile net income to ;
Depreciation expense	$      82,480
Changes in current operating assets and liabilities
Decrease in accounts receivable	$      16,910
Increase in inventories	$   (22,730)
Increase in prepaid expenses	$      (2,610)
Increase in accounts payable	$      14,240
		$      88,290
Net cash provided by operating activities		$   436,850
Cash flows from investing activities
Cash paid for purchase of equipment	$ (162,120)
Net cash used by investing activities		$ (162,120)
Cash flows from financing activities
Cash paid for dividends	$ (152,480)
Cash received from issuance of common stock	$   180,000
Cash paid for mortgage note payable	$ (335,410)
Net cash used by financing activities		$ (307,890)
Net Decrease in cash and cash equivalents		$   (33,160)
Cash and cash equivalents at beginning of period		$   179,640
Cash and cash equivalents at end of period		$   146,480

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