Question

Grouper Inc., a greeting card company, had the following statements prepared as of December 31, 2017.

GROUPER INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
		12/31/17			12/31/16
Cash		$6,000			$7,000
Accounts receivable		62,600			50,600
Short-term debt investments (available-for-sale)		35,200			18,100
Inventory		39,600			59,700
Prepaid rent		5,000			4,000
Equipment		152,800			128,900
Accumulated depreciation—equipment		(34,900	)		(24,800	)
Copyrights		45,900			49,800
Total assets		$312,200			$293,300
Accounts payable		$45,900			$39,900
Income taxes payable		4,000			6,000
Salaries and wages payable		8,100			3,900
Short-term loans payable		8,000			10,000
Long-term loans payable		60,500			68,500
Common stock, $10 par		100,000			100,000
Contributed capital, common stock		30,000			30,000
Retained earnings		55,700			35,000
Total liabilities & stockholders’ equity		$312,200			$293,300

GROUPER INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017
Sales revenue				$337,675
Cost of goods sold				175,500
Gross profit				162,175
Operating expenses				119,500
Operating income				42,675
Interest expense		$11,300
Gain on sale of equipment		2,000		9,300
Income before tax				33,375
Income tax expense				6,675
Net income				$26,700

Additional information:

1.		Dividends in the amount of $6,000 were declared and paid during 2017.
2.		Depreciation expense and amortization expense are included in operating expenses.
3.		No unrealized gains or losses have occurred on the investments during the year.
4.		Equipment that had a cost of $20,000 and was 70% depreciated was sold during 2017.

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).)

GROUPER INC. Statement of Cash Flows December 31, 2017For the Year Ended December 31, 2017For the Quarter Ended December 31, 2017
		$
	$
		$

Show Work is REQUIRED for this question:

Open Show Work

Answer 1

Grouper Inc
Statement of cash flows
For the current year 2017
Cash flows from operating activities
Net income	$26,700
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	$24,100		((20000*70%)+34900-24800)
Amortization expense	$3,900		49800-45900
Gain on sale of equipment	-$2,000
Increase in accounts receivable	-$12,000		50600-62600
Decrease in inventory	$20,100		59700-39600
Increase in prepaid expenses	-$1,000		4000-5000
Increase in accounts payable	$6,000		45900-39900
Decrease in income taxes payable	-$2,000		4000-6000
Increase in salaries and wages payable	$4,200		8100-3900
Net cash provided by operating activities		$68,000
Cash flows from investing activities
Proceeds from sale of equipment	$8,000		(20000*30%)+2000
Purchase of equipment	-$43,900		(152800+20000-128900)
Increase in short term investment	-$17,100		18100-35200
Net cash used by investing activities		-$53,000
Cash flows from financing activities
Repayment of short term notes payable	-$2,000		8000-10000
Repayment of long term notes payable	-$8,000		60500-68500
Dividend paid	-$6,000
Net cash provided by financing activities		-$16,000
Net increase in cash		-$1,000
Cash balance, December 31, prior year		$7,000
Cash balance, December 31, current year		$6,000