Question

The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Wright Company. Additional information from Wright's accounting records is provided also.

WRIGHT COMPANY
Comparative Balance Sheets
December 31, 2018 and 2017
($ in 000s)
2018 2017
Assets
Cash $ 143 $ 130
Accounts receivable 171 175
Short-term investment 70 30
Inventory 175 170
Land 130 160
Buildings and equipment 800 600
Less: Accumulated depreciation (235 ) (175 )
$ 1,254 1,090
Liabilities
Accounts payable $ 51 $ 55
Salaries payable 2 5
Interest payable 9 8
Income tax payable 6 12
Notes payable 0 40
Bonds payable 380 300
Shareholders’ Equity
Common stock 475 400
Paid-in capital—excess of par 221 200
Retained earnings 110 70
$ 1,254 $ 1,090

WRIGHT COMPANY
Income Statement
For Year Ended December 31, 2018
($ in 000s)
Revenues:
Sales revenue $ 700
Expenses:
Cost of goods sold $ 330
Salaries expense 95
Depreciation expense 60
Interest expense 12
Loss on sale of land 4
Income tax expense 99 600
Net income $ 100

Additional information from the accounting records:

Land that originally cost $30,000 was sold for $26,000.
The common stock of Microsoft Corporation was purchased for $40,000 as a short-term investment not classified as a cash equivalent.
New equipment was purchased for $200,000 cash.
A $40,000 note was paid at maturity on January 1.
On January 1, 2018, bonds were sold at their $80,000 face value.
Common stock ($75,000 par) was sold for $96,000.
Net income was $100,000 and cash dividends of $60,000 were paid to shareholders.

Required:
Prepare the statement of cash flows of Wright Company for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands (i.e., 5,000 should be entered as 5).)

Answer 1

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Cash Flow
Cash Received from Customers	Working-1	$                 704
Cash paid to vendors	Working-2	$                -339
Cash Paid for Income Tax	Working-3	$                -105
Payment of Salaries	Working-3	$                  -98
Payment of Interest	Working-3	$                  -11
Net Cash flow from Operating Activities		$                 151
Cash flow from Investing activities:
Sale of Land		$                    26
Purchase of Equipment		$                -200
Purchase of Equipment		$                  -40
Net Cash from Investing Activities		$                -214
Cash flow from financing activities:
Payment of Note		$                  -40
Issue of Bond		$                    80
Issue of Ordinary Share		$                    96
Payment of Dividend	Working-5	$                  -60
Net Cash from Financing Activities		$                    76
Net Increase in Cash		$                    13
Add: Beginning Balance		$                 130
Ending Balance		$                 143		$                -
Working-1
Beginning Receivable	$                                       175
Add: Sale	$                                       700
Less: Ending Receivable	$                                      -171
Cash Received from Customers	$                                       704
Working-2
Cost of Goods Sold	$                                       330
Less:Beginning Inventory	$                                      -170
Add: Ending Inventory	$                                       175
Purchases	$                                       335
Beginign Payable	$                                          55
Add: Purchase	$                                       335
Less: Ending Payable	$                                        -51
Cash paid to vendors	$                                       339
Working-2	Income Tax	Salaries	Interest
Beginning Payable	$                                          12	$                      5	$              8
Add: Expense	$                                          99	$                    95	$            12
Less: Ending Payable	$                                          -6	$                    -2	$            -9
Cash Paid for	$                                       105	$                    98	$            11
Working-5
Beginning Retained Earning	$                                          70
Add: Net Income	$                                       100
Less: Ending Retained Earning	$                                      -110
Dividend Paid	$                                          60