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).)

Expert Solution

ekkarill92 answered 2 years ago

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