In: Accounting
. A comparative balance sheet for the Rivera Corporation is presented below:
Rivera Corporation
Comparative Balance Sheet
2016 2015
Assets
Cash $ 25,000 $33,000
Accounts receivable (net) 23,000 14,000
Merchandise Inventory 41,000 25,000
Equipment 73,000 78,000
Accumulated Depreciation (27,000) 46,000 (24,000) 54,000
Total Assets $135,000 $126,000
Liabilities and Stockholders' Equity
Accounts payable $ 23,000 $ 43,000
Income Tax Payable 26,000 20,000
Bonds payable 20,000 10,000
Common stock 25,000 25,000
Retained earnings 41,000 28,000
Total liabilities/Stockholders' Equity $135,000 $126,000
Additional information:
1. Net Income for 2016 is $38,000. Net sales for 2016 are $286,000.
2. Cash dividends of $25,000 were declared and paid in 2016
3. During the year, equipment was sold for $10,000 for cash. This equipment cost
$13,000 originally and had a book value of $10,000 at the time of sale.
4. All depreciation for the year was $6,000.
5. Additional equipment was purchased for $8,000 cash.
Prepare a statement of cash flows for the year ended 2016 using the indirect method.
Rivera Corporation |
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Statement of Cash Flows |
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Year Ended 2016 |
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Cash Flow from Operating Activities: |
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Net Income |
$38,000 |
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Adjustments to Reconcile Net income to Net Cash Flow from Operating Activities |
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Depreciation Expense |
$6,000 |
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Increase in Accounts Receivable |
($9,000) |
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Increase in Merchandise Inventory |
($16,000) |
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Decrease in Accounts Payable |
($20,000) |
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Increase in Income Tax Payable |
$6,000 |
($33,000) |
Net Cash Flow from (Used for) Operating Activities |
$5,000 |
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Cash Flow from Investing Activities: |
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Cash paid for purchase of equipment |
($8,000) |
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Cash receipt from sale of equipment |
$10,000 |
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Net Cash Flow from (Used for) Investing Activities |
$2,000 |
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Cash Flow from Financing Activities: |
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Cash receipts from issue of bonds |
$10,000 |
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Cash Dividend Paid |
($25,000) |
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Net Cash Flow from (Used for) Financing Activities |
($15,000) |
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Net Cash Increase / (Decrease) |
($8,000) |
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Cash Balance, 2015 |
$33,000 |
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Cash Balance, 2016 |
$25,000 |