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. A comparative balance sheet for the Rivera Corporation is presented below: Rivera Corporation Comparative Balance...

. 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.

Solutions

Expert Solution

Rivera Corporation

Statement of Cash Flows

Year Ended 2016

Cash Flow from Operating Activities:

Net Income

$38,000

Adjustments to Reconcile Net income to Net Cash Flow from Operating Activities

Depreciation Expense

$6,000

Increase in Accounts Receivable

($9,000)

Increase in Merchandise Inventory

($16,000)

Decrease in Accounts Payable

($20,000)

Increase in Income Tax Payable

$6,000

($33,000)

Net Cash Flow from (Used for) Operating Activities

$5,000

Cash Flow from Investing Activities:

Cash paid for purchase of equipment

($8,000)

Cash receipt from sale of equipment

$10,000

Net Cash Flow from (Used for) Investing Activities

$2,000

Cash Flow from Financing Activities:

Cash receipts from issue of bonds

$10,000

Cash Dividend Paid

($25,000)

Net Cash Flow from (Used for) Financing Activities

($15,000)

Net Cash Increase / (Decrease)

($8,000)

Cash Balance, 2015

$33,000

Cash Balance, 2016

$25,000

ekkarill92 answered 1 year ago
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