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In: Accounting
Problem 23-9 Sunland Corporation has contracted with you to prepare a statement of cash flows. The...
Problem 23-9
Sunland Corporation has contracted with you to prepare a statement of cash flows. The controller has provided the following information.
|
December 31 |
||||
|
2017 |
2016 |
|||
| Cash |
$38,900 |
$12,800 |
||
| Accounts receivable |
12,200 |
9,900 |
||
| Inventory |
11,800 |
10,000 |
||
| Equity investments |
–0– |
3,100 |
||
| Buildings |
–0– |
29,600 |
||
| Equipment |
40,400 |
20,200 |
||
| Copyrights |
5,000 |
5,200 |
||
| Totals |
$108,300 |
$90,800 |
||
| Allowance for doubtful accounts |
$3,000 |
$4,600 |
||
| Accumulated depreciation—equipment |
2,000 |
4,500 |
||
| Accumulated depreciation—buildings |
–0– |
5,900 |
||
| Accounts payable |
5,000 |
4,000 |
||
| Dividends payable |
–0– |
4,900 |
||
| Notes payable, short-term (nontrade) |
3,000 |
4,000 |
||
| Long-term notes payable |
36,000 |
25,000 |
||
| Common stock | 38,000 | 33,000 | ||
| Retained earnings |
21,300 |
4,900 |
||
|
$108,300 |
$90,800 |
|||
Additional data related to 2017 are as follows.
| 1. | Equipment that had cost $10,900 and was 30% depreciated at time of disposal was sold for $2,500. | |
| 2. | $5,000 of the long-term note payable was paid by issuing common stock. | |
| 3. | Cash dividends paid were $4,900. | |
| 4. | On January 1, 2017, the building was completely destroyed by a flood. Insurance proceeds on the building were $32,800 (net of $4,000 taxes). | |
| 5. | Equity investments (ownership is less than 20% of total shares) were sold at $1,600 above their cost. No unrealized gains or losses were recorded in 2017. | |
| 6. | Cash and long-term note for $16,000 were given for the acquisition of equipment. | |
| 7. | Interest of $1,900 and income taxes of $5,000 were paid in cash. |
(a) Use the indirect method to analyze the above
information and prepare a statement of cash flows for Sunland.
(Show amounts that decrease cash flow with either a -
sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
Solutions
Expert Solution
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| Cash flows from operating activities | |||||
| Net income | Working a | $ 16,400 | |||
| Adjustments to reconcile net income: | |||||
| Loss on sale of equipment | Working b | $ 5,130 | |||
| Gain from flood damage | ($32,800+$4,000)-($29,600-$5,900) | $ -13,100 | |||
| Depreciation expense | Working c | $ 770 | |||
| Copyright amortization | $ 200 | ||||
| Gain on sale of equity investment | $ -1,600 | ||||
| Increase in accounts receivable (net) | $ -3,900 | ||||
| Increase in inventory | $ -1,800 | ||||
| Increase in accounts payable | $ 1,000 | $ -13,300 | |||
| Net cash flow provided by operating activities | $ 3,100 | ||||
| Cash flows from investing activities | |||||
| Sale of equity investments | $ 4,700 | ||||
| Sale of equipment | $ 2,500 | ||||
| Purchase of equipment (cash) | Working d | $ -15,100 | |||
| Proceeds from flood damage to building | $ 36,800 | ||||
| Net cash provided by investing activities | $ 28,900 | ||||
| Cash flows from financing activities | |||||
| Payment of dividends | $ -4,900 | ||||
| Payment of short-term note payable | $ -1,000 | ||||
| Net cash used by financing activities | $ -5,900 | ||||
| Increase in cash | $ 26,100 | ||||
| Cash, January 1, 2016 | $ 12,800 | ||||
| Cash, December 31, 2017 | $ 38,900 | ||||
| Supplemental disclosures of cash flow information: | |||||
| Cash paid during the year for: | |||||
| Interest | $ 1,900 | ||||
| Income taxes | $ 5,000 | ||||
| Non-cash investing and financing activities: | |||||
| Retired note payable by issuing ordinary shares | $ 5,000 | ||||
| Purchased equipment by issuing note payable | $ 16,000 | ||||
| $ 21,000 | |||||
| Working a | |||||
| Ending Retained Earning | $ 21,300 | ||||
| Beginning retained earnings | $ -4,900 | ||||
| Net Income | $ 16,400 | ||||
| Working b | |||||
| Cost | $ 10,900 | ||||
| Accumulated depreciation (30% X $10,900) | $ -3,270 | ||||
| Book value | $ 7,630 | ||||
| Proceeds from sale | $ -2,500 | ||||
| Loss on Sale | $ 5,130 | ||||
| Working c | |||||
| Accumulated depreciation on equipment sold | $ 3,270 | ||||
| Decrease in accumulated depreciation -Equipment | $ -2,500 | ||||
| Depreciation expense | $ 770 | ||||
| Working d | |||||
| Beginning Equipment | $ 20,200 | ||||
| Less: Sale | $ -10,900 | ||||
| Balance after Sale | $ 9,300 | ||||
| Ending Balance |
$ &nbs
 ekkarill92 answered 2 years agoRelated SolutionsProblem 23-9 Novak Corporation has contracted with you to prepare a statement of cash flows. The...Problem 23-9
Novak Corporation has contracted with you to prepare a statement
of cash flows. The controller has provided the following
information.
December 31
2017
2016
Cash
$38,600
$13,000
Accounts receivable
12,200
10,000
Inventory
11,900
9,900
Equity investments
–0–
3,000
Buildings
–0–
29,800
Equipment
40,000
20,000
Copyrights
5,100
5,200
Totals
$107,800
$90,900
Allowance for doubtful accounts
$2,900
$4,500
Accumulated depreciation—equipment
2,000
4,500
Accumulated depreciation—buildings
–0–
5,900
Accounts payable
5,100
4,000
Dividends payable
–0–
4,900
Notes payable, short-term (nontrade)
2,900
4,000...
IFRS 23-7 Skysong Corporation has contracted with you to prepare a statement of cash flows. The...IFRS 23-7
Skysong Corporation has contracted with you to prepare a
statement of cash flows. The controller has provided the following
information.
December 31
2017
2016
Buildings
$
–0–
$28,550
Equipment
44,000
19,000
Patents
4,920
6,150
Investments
–0–
2,900
Inventory
10,400
7,800
Accounts receivable
12,150
8,800
Cash
34,580
12,800
$
106,050
$86,000
Share capital—ordinary
$
42,800
$32,800
Retained earnings
20,650
5,800
Allowance for doubtful accounts
2,900
4,300
Accumulated depreciation on equipment
1,900
4,300
Accumulated depreciation on buildings
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5,800
Accounts...
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IFRS 23-7
Bridgeport Corporation has contracted with you to prepare a
statement of cash flows. The controller has provided the following
information.
December 31
2017
2016
Buildings
$
–0–
$29,850
Equipment
50,500
25,500
Patents
5,440
6,800
Investments
–0–
3,550
Inventory
11,050
9,100
Accounts receivable
12,800
10,100
Cash
32,435
14,100
$
112,225
$99,000
Share capital—ordinary
$
44,100
$34,100
Retained earnings
21,300
7,100
Allowance for doubtful accounts
3,550
5,600
Accumulated depreciation on equipment
2,550
5,600
Accumulated depreciation on buildings
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7,100
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IFRS 23-7 Sandhill Corporation has contracted with you to prepare a statement of cash flows. The...
IFRS 23-7
Sandhill Corporation has contracted with you to prepare a
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information.
December 31
2017
2016
Buildings
$ –0–
$29,250
Equipment
47,500
22,500
Patents
5,200
6,500
Investments
–0–
3,250
Inventory
10,750
8,500
Accounts receivable
12,500
9,500
Cash
33,425
13,500
$ 109,375
$93,000
Share capital—ordinary
$ 43,500
$33,500
Retained earnings
21,000
6,500
Allowance for doubtful accounts
3,250
5,000
Accumulated depreciation on equipment
2,250
5,000
Accumulated depreciation on buildings
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December 31
2017
2016
Cash
$38,500
$13,000
Accounts receivable
12,250
10,000
Inventory
12,000
10,000
Equity investments
–0–
3,000
Buildings
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29,750
Equipment
40,000
20,000
Copyrights
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5,250
Totals
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$91,000
Allowance for doubtful accounts
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$4,500
Accumulated depreciation—equipment
2,000
4,500
Accumulated depreciation—buildings
–0–
6,000
Accounts payable
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4,000
Dividends payable
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Notes payable, short-term (nontrade)
3,000
4,000
Long-term notes...
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SUNLAND COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR
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