Question

Comparative balance sheets for 2015 and 2016 and a statement of income for 2016 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided. METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2015 and 2016 ($ in 000s)

2015 2016

Assets

Cash $ 120 $ 97

Petty cash 6 5

Accounts receivable 28 16

Allowance for uncollectible accounts (5) (3)

Investment in A Corp 15 0

Investment in B Inc 0 22

Inventory 23 33

Prepaid insurance 6 5

Supplies 10 13

Land 75 60

Building 120 145

Less: Accumulated depreciation (24) (30)

Equipment 60 40

Less: Accumulated depreciation (36) (28)

$ 398 $ 375

Liabilities

Accounts payable $ 38 $ 33

Salaries payable 7 9

Interest payable 2 4

Note payable 160 120

Owner's Equity

Owner's contribution   145 176

Capital 46 62

Withdrawal 0 (29)

$ 398 $ 375

METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2016

Revenues

Sales revenue $ 192

Expenses

Cost of goods sold $ 94

Bad debt expense 3

Insurance expense 26

Supplies expense 22

Depreciation expense 11

Salaries expense 24

Interest expense 12

Utilities expense 11

Total expenses 203

Income from operations (11)

Other income and expenses

Gain of sale of land 22

Gain on sale of equipment 7

Loss on sale of Investment A (2)

Total other income and expenses 27

Net income $ 16

Required: Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2016. Present cash flows from operating activities by the direct method.

Answer 1