In: Accounting
The comparative balance sheet of Pelican Joe Industries Inc. for December 31, 2016 and 2015, is as follows:
1 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
2 |
Assets |
||
3 |
Cash |
$486.00 |
$158.00 |
4 |
Accounts receivable (net) |
280.00 |
195.00 |
5 |
Inventories |
172.00 |
110.00 |
6 |
Land |
400.00 |
453.00 |
7 |
Equipment |
223.00 |
172.00 |
8 |
Accumulated depreciation-equipment |
(60.00) |
(27.00) |
9 |
Total assets |
$1,501.00 |
$1,061.00 |
10 |
Liabilities and Stockholders’ Equity |
||
11 |
Accounts payable (merchandise creditors) |
$180.00 |
$161.00 |
12 |
Dividends payable |
32.00 |
|
13 |
Common stock, $10 par |
105.00 |
45.00 |
14 |
Paid-in capital: Excess of issue price over par—common stock |
247.00 |
121.00 |
15 |
Retained earnings |
937.00 |
734.00 |
16 |
Total liabilities and stockholders’ equity |
$1,501.00 |
$1,061.00 |
The following additional information is taken from the records:
1. | Land was sold for $120. |
2. | Equipment was acquired for cash. |
3. | There were no disposals of equipment during the year. |
4. | The common stock was issued for cash. |
5. | There was a $299 credit to Retained Earnings for net income. |
6. | There was an $96 debit to Retained Earnings for cash dividends declared. |
Required:
A. | Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash out flow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section. |
B. | Was the net cash flow from operations for Pelican Joe Industries Inc. more or less than net income? What is the source of this difference? |
Labels and Amount Descriptions
Labels and Amount Descriptions |
|
Amortization of intangible assets | |
Cash paid for dividends | |
Cash paid for purchase of equipment | |
Cash received from sale of common stock | |
Cash received from sale of land | |
December 31, 2016 | |
Decrease in accounts payable | |
Decrease in accounts receivable | |
Decrease in cash | |
Decrease in inventories | |
Depreciation | |
For the Year Ended December 31, 2016 | |
Gain on sale of land | |
Increase in accounts payable | |
Increase in accounts receivable | |
Increase in cash | |
Increase in inventories | |
Loss on sale of land | |
Net cash flow from operating activities | |
Net cash flow used for operating activities | |
Net cash flow from investing activities | |
Net cash flow used for investing activities | |
Net cash flow from financing activities | |
Net cash flow used for financing activities | |
Net income | |
Net loss |
a) | |||
Pelican Joe Industries Inc. | |||
Statement of Cash Flow | |||
December 31st,2016 | |||
Cash Flow from Operating Activities | |||
Net Income | $ 299.00 | ||
Operating Activities | |||
Depreciation Expense | $ 33.00 | ||
Gain on sale of Land | $ -67.00 | ||
Increase in Accounts Receivable($280-$195) | $ -85.00 | ||
Decrease in Inventory($172-$110) | $ -62.00 | ||
Increase in Accounts Payable($180-$161) | $ 19.00 | ||
$ -162.00 | |||
Net Cash Provided by Operating Activity=(A) | $ 137.00 | ||
Cash Flow from Investing Activities | |||
Sale of Land | $ 120.00 | ||
Purchase of Equipment | $ -51.00 | ||
Cash Flow from Investing Activities=(B) | $ 69.00 | ||
Cash Flow fom Financing Activities | |||
Issue of Common Stock including paid in capital | $ 186.00 | ||
Payment of Dividends | $ -64.00 | ||
Net Cash used by Financing Activities=(C) | $ 122.00 | ||
Net Increase in cash=(D )=(A)+(B)+(C ) | $ 328.00 | ||
Cash at the beginning of the period=(E ) | $ 158.00 | ||
Cash at the end of the period=(D )+(E ) | $ 486.00 | ||
Accumulated Depreciation | |||
Beginning balance | $ 27.00 | ||
Ending balance | $ 60.00 | Depreciation Expense | $ 33.00 |
Total | $ 60.00 | Total | $ 60.00 |
Equipment | |||
Beginning Balance | $ 172.00 | ||
Bank | $ 51.00 | ||
Balance C/d | $ 223.00 | ||
Total | $ 223.00 | Total | $ 223.00 |
Land | |||
Beginning Balance | $ 453.00 | Bank | $ 120.00 |
Gain on sale of Land | $ 67.00 | ||
Balance C/d | $ 400.00 | ||
Total | $ 520.00 | Total | $ 520.00 |
Retained Earnings | |||
Dividend Payable(As per balance sheet) | $ 32.00 | Beginning balance | $ 734.00 |
Dividend Payable($96-$32) | $ 64.00 | ||
Ending balance | $ 937.00 | Net Income | $ 299.00 |
Total | $ 1,033.00 | Total | $ 1,033.00 |
b) Net Income is higher than the net cash flow from operating activities in 2016 due to | |||
Depreciation Expense | $ 33.00 | ||
Gain on sale of Land | $ -67.00 | ||
Increase in Accounts Receivable | $ -85.00 | ||
Decrease in Inventory | $ -62.00 | ||
Increase in Accounts Payable | $ 19.00 |