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Comparative balance sheet accounts of Larkspur Inc. are presented below. LARKSPUR INC. COMPARATIVE BALANCE SHEET ACCOUNTS...

Comparative balance sheet accounts of Larkspur Inc. are presented below.

LARKSPUR INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2017 AND 2016

December 31
Debit Accounts

2017

2016
Cash

$42,300

$33,500
Accounts Receivable

70,600

59,900
Inventory

30,300

24,000
Equity investments

22,300

38,200
Machinery

29,900

18,700
Buildings

67,300

56,200
Land

7,600

7,600

$270,300

$238,100
Credit Accounts
Allowance for Doubtful Accounts

$2,300

$1,500
Accumulated Depreciation—Machinery

5,700

2,300
Accumulated Depreciation—Buildings

13,600

9,100
Accounts Payable

35,000

24,800
Accrued Payables

3,400

2,600
Long-Term Notes Payable

21,100

31,000
Common Stock, no-par

150,000

125,000
Retained Earnings

39,200

41,800

$270,300

$238,100


Additional data (ignoring taxes):

1. Net income for the year was $43,700.
2. Cash dividends declared and paid during the year were $21,300.
3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized.
4. Equity investments (level of ownership is less than 20%) that cost $25,000 were sold during the year for $28,700. No unrealized gains and losses were recorded on these investments in 2017.
5. Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2,150.


Larkspur’s 2017 income statement follows (ignoring taxes).

Sales revenue

$543,500
Less: Cost of goods sold

382,600
Gross margin

160,900
Less: Operating expenses (includes $8,650 depreciation and $5,824 bad debts)

120,100
Income from operations

40,800
Other: Gain on sale of investments

$3,700
          Loss on sale of machinery

(800

)

2,900
Net income

$43,700


(a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Net cash flow from operating activities $


(b) 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).)

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Expert Solution

ekkarill92 answered 1 year ago
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