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Exercise 23-11 Condensed financial data of Windsor Company for 2017 and 2016 are presented below. WINDSOR...

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).)

Solutions

Expert Solution

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

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