In: Accounting
Exercise 23-11
Condensed financial data of Windsor Company for 2017 and 2016 are presented below.
WINDSOR COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 |
||||||
2017 |
2016 |
|||||
Cash |
$1,780 |
$1,140 |
||||
Receivables |
1,760 |
1,310 |
||||
Inventory |
1,570 |
1,900 |
||||
Plant assets |
1,890 |
1,720 |
||||
Accumulated depreciation |
(1,190 |
) |
(1,150 |
) |
||
Long-term investments (held-to-maturity) |
1,280 |
1,410 |
||||
$7,090 |
$6,330 |
|||||
Accounts payable |
$1,220 |
$890 |
||||
Accrued liabilities |
210 |
250 |
||||
Bonds payable |
1,430 |
1,540 |
||||
Common stock |
1,940 |
1,730 |
||||
Retained earnings |
2,290 |
1,920 |
||||
$7,090 |
$6,330 |
WINDSOR COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 |
||
Sales revenue |
6670 |
|
Cost of goods sold |
4,640 |
|
Gross margin |
2,030 |
|
Selling and administrative expenses |
930 |
|
Income from operations |
1,100 |
|
Other revenues and gains |
||
Gain on sale of investments |
80 |
|
Income before tax |
1,180 |
|
Income tax expense |
550 |
|
Net income |
630 |
|
Cash dividends |
260 |
|
Income retained in business |
$370 |
Additional information:
During the year, $70 of common stock was issued in exchange for
plant assets. No plant assets were sold in 2017.
Prepare a statement of cash flows using the indirect method.
(Show amounts that decrease cash flow with either a -
sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Cash flow from operating activities | ||
Net income | 630 | |
Adjustment to reconcile net income to | ||
Net cash flow from operating activities | ||
Gain on sale of investments | -80 | |
Depreciation expense | 40 | |
Increase receivables | -450 | |
Decrease inventory | 330 | |
Increase account payable | 330 | |
Decrease accured liabilities | -40 | |
130 | ||
Net cash flow from operating activities | 760 | |
Cash flow from investing activities | ||
Purchase plant assets | -100 | |
Sale long term investment | 210 | |
Net cash flow from investing activities | 110 | |
Cash flow from financing activities | ||
Bond redemption | -110 | |
Dividend paid | -260 | |
Issue common Stock | 140 | |
Net cash flow from financing activities | -230 | |
Net Cash flow | 640 | |
Beginning cash | 1140 | |
Ending cash | 1780 | |