In: Accounting
The comparative balance sheets of Posner Company, for Years 1
and 2 ended December 31, appear below in condensed form:
Year 2 | Year 1 | |
Assets | ||
Cash | $ 53,000 | $50,000 |
Accounts receivable (net) | 37,000 | 48,000 |
Inventories | 108,500 | 100,000 |
Investments | - | 70,000 |
Equipment | 573,200 | 450,000 |
Accumulated depreciation—equipment | (142,000) | (176,000) |
Total assets | $629,700 | $542,000 |
Liabilities and Stockholders' Equity | ||
Accounts payable | $ 62,500 | $43,800 |
Bonds payable, due Year 2 | - | 100,000 |
Common stock, $10 par | 325,000 | 285,000 |
Paid-in capital in excess of par—common stock | 80,000 | 55,000 |
Retained earnings | 162,200 | 58,200 |
Total liabilities and stockholders' equity | $629,700 | $542,000 |
The income statement for the current year is as
follows:
Sales | $625,700 | ||
Cost of goods sold | 340,000 | ||
Gross profit | $285,700 | ||
Operating expenses: | |||
Depreciation expense | $ 26,000 | ||
Other operating expenses | 68,000 | ||
Total operating expenses | 94,000 | ||
Income from operations | $191,700 | ||
Other income: | |||
Gain on sale of investment | $4,000 | ||
Other expense: | |||
Interest expense | 6,000 | (2,000) | |
Income before income tax | $189,700 | ||
Income tax | 60,700 | ||
Net income | $129,000 |
Additional data for the current year are as follows:
Prepare a statement of cash flow, using the indirect method of reporting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.
Posner Company | ||
Statement of Cash Flows | ||
For the Year Ended December 31, Year 2 | ||
Cash flows from operating activities: | ||
$ | ||
Adjustments to reconcile net income to net cash flow from operating activities: | ||
Changes in current operating assets and liabilities: | ||
Net cash flow from operating activities | $ | |
Cash flows from investing activities: | ||
$ | ||
Net cash flow used for investing activities | ||
Cash flows from financing activities: | ||
$ | ||
Net cash flow used for financing activities | ||
$ | ||
Cash at the beginning of the year | ||
Cash at the end of the year | $ |
Please find the attached sheets for detailed answer,
Please comment for any addititonal explantion,
Thanks,