Question

Eagles Inc. had the following statement of financial position at the end of operations for 2017:

Cash 32000 Accounts payable 48000

Accounts receivable 33920 Bonds payable 65600

FV-NI investments 51200 Common shares 160000

Equipment (net) 129600 Retained earnings 37120

Land 64000

310720 310720

During 2018, the following occurred:+ 1. Eagles sold its FV-NI investments portfolio at a gain of $9,600. 2. A parcel of land was purchased for $75,200. 3. An additional $60,800 worth of common shares was issued. 4. Dividends totalling $19,200 were declared and paid to shareholders. 5. Net income for 2018 was $73,600. 6. Depreciation for 2018 was 19,200. 7. At December 31, 2018, Cash was $125,120; Accounts Receivable was $67,200; and Accounts Payable was $64,000.

1. Prepare the statement of financial position as it would appear at December 31, 2018.

2. Prepare a statement of cash flows for the year ended December 31, 2018 using the indirect method. Assume dividends paid are treated as financing activities.

Answer 1

1.)	Statement of Financial Position
	Assets	Amount $
	Non-Current assets
	Equipment (net) ( 129,600 - 19,200 )	110,400
	Land ( 64,000 + 75,200 )	139,200
	Current Assets
	Cash	125,120
	Accounts receivable	67,200
	Total Assets	441,920
	Current Liabilities
	Accounts payable	64,000
	Non-Current Liabilities
	Bonds Payable	65,600
	Stockholder's Equity
	Common Shares ( 160,000 + 60,800 )	220,800
	Retained earnings	91,520
	(37,120 + 73,600 - 19,200 )
	Total Liabilities & Stockholder's Equity	441,920
2.)	Cash Flow statement for year ended December 31, 2018
	Particulars	Amount in $
	Cash flows from operating activities
	Net Income	73,600
	Adjustments to arrive cash flow from operating activities:
	Depreciation expense	19,200
	Gain on Sale of Investments	-9,600
	Increase in accounts receivables	-33,280
	Increase in accounts payable	16,000
	Net Cash flow from operating activities	65,920
	Cash flows from investing activities
	Purchase of Land	-75,200
	Sale of Investments ( 51,200 + 9,600 )	60,800
	Net Cash flow from (used in ) Investing activities	-14,400
	Cash flows from financing activities
	Proceeds from Issue of Common Shares	60,800
	Cash Dividend paid	-19,200
	Net Cash flows from financing activities	41,600
	Net increase(decrease) in cash and cash equivalents (A)	93,120
	Cash and cash equivalents at beginning of period (B)	32,000
	Cash and cash equivalents at end of period =A+B	125,120
		-