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15. Statement of Cash Flows—Direct Method The comparative balance sheet of Canace Products Inc. for December...

15. Statement of Cash Flows—Direct Method

The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows:

Dec. 31, 20Y6 Dec. 31, 20Y5
Assets
Cash $285,700 $266,070
Accounts receivable (net) 103,500 95,560
Inventories 292,160 282,940
Investments 0 109,610
Land 149,860 0
Equipment 322,350 250,140
Accumulated depreciation-equipment (75,470) (67,450)
Total assets $1,078,100 $936,870
Liabilities and Stockholders' Equity
Accounts payable $195,140 $184,560
Accrued expenses payable 19,410 24,360
Dividends payable 10,780 8,430
Common stock, $10 par 58,220 45,910
Paid-in capital: Excess of issue price over par-common stock 218,850 127,410
Retained earnings 575,700 546,200
Total liabilities and stockholders’ equity $1,078,100 $936,870

The income statement for the year ended December 31, 20Y6, is as follows:

Sales $1,624,900
Cost of merchandise sold 669,100
Gross profit $955,800
Operating expenses:
Depreciation expense $8,020
Other operating expenses 843,780
Total operating expenses 851,800
Operating income $104,000
Other expense:
Loss on sale of investments (29,590)
Income before income tax $74,410
Income tax expense 23,810
Net income $50,600

Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows:

  1. Equipment and land were acquired for cash.
  2. There were no disposals of equipment during the year.
  3. The investments were sold for $80,020 cash.
  4. The common stock was issued for cash.
  5. There was a $21,100 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Canace Products Inc.
Statement of Cash Flows
For the Year Ended December 31, 20Y6
Cash flows from operating activities:
Cash received from customers $
Cash payments for merchandise
Cash payments for operating expenses
Cash payments for income taxes
Net cash flow from operating activities $
Cash flows from (used for) investing activities:
Cash from sale of investments $
Cash used for purchase of land
Cash used for purchase of equipment
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
Cash from sale of common stock $
Cash used for dividends
Net cash flow from financing activities
Increase in cash $
Cash at the beginning of the year
Cash at the end of the year $

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ekkarill92 answered 1 year ago
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