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Terry company's 2017 income statement and comparative balance sheets at December 31 of 2016 and 2017are...

Terry company's 2017 income statement and comparative balance sheets at December 31 of 2016 and 2017are shown.

Terry Company

                                                                    Income Statement

         For the year Ended December 31, 2017

    Sales                                                 $ 390,000

    Cost of Goods Sold                             235,000

                                                                                _______

       Gross Profit                                                          $ 155,000

    Wages Expenses                              $ 63,000

    Depreciation Expense                         14,000

    Other Operating Expenses                  26,000

    Income Tax Expense                           17,000           120,000

                                                                                 ______        ________

       Net Income                                                           $ 35,000

                                                  

Terry Company

Balance Sheets

                                                                       Dec. 31,            Dec. 31,

                    Assets                                          2016                 2017

                    Cash                                          $ 16,000         $ 30,000

                    Accounts Receivable (net)            28,000            35,000

                    Inventory                                    110,000            84,000

                    Prepaid Expense                           12,000             8,000

                    Plant Assets                                 178,000           130,000

                    Accumulated Depreciation          (76,000)          (62,000)

                                        

                       Total Assets                             $ 268,000         $ 225,000

                                       

                    Liabilities and Stockholders' Equity

                    Accounts Payable                       $ 27,000         $ 14,000

                    Wages Payable                                 6,000                2,500

                    Income Tax Payable                         3,000               4,500

                    Common Stock                             135,000           125,000

                    Retained Earnings                           97,000             79,000

                                                                          ________        _________

                    Total Liabilities and                    $ 268,000         $ 225,000

                   

                    Stockholders' Equity           

    

Cash dividends of $17,000 were declared and paid during 2016 Plant assets of $48,000 were purchased for cash, and later in the year, an additional $10,000 common stock was issued for cash

REQUIRED

            Prepare only the Cash Flows from Operations section of the Cash Flow Statement using the

             indirect method.

Reminder: you need only prepare the Cash Flow from Operations section of the statement

Solutions

Expert Solution

Statement of Cash Flow
Particulars Amount Total Amount
Cash flow from operating activities
Net Income                 35,000.00
Add Tax provision                 17,000.00
Depreciation                 14,000.00
Increase in AR                 (7,000.00)
Decrease in inventory                 26,000.00
Decrease in prepaid expense                    4,000.00
Decrease in AP               (13,000.00)
Decrease in wages payable                 (3,500.00)
Taxes paid = 17000+3000 - 4500               (15,500.00)
Cash flow from operating activities            57,000.00
Cash flow from Investing activities
Sale of plant assets = 48,000- 28,000 Acc Dep                 20,000.00
Cash flow from Investing activities            20,000.00
Cash flow from Financing activities
Issue of stock                 10,000.00
Redemption of Stock               (20,000.00)
Dividends Paid = 35,000 - (79000 - 97000)               (53,000.00)
Cash flow from Financing activities          (63,000.00)
net change in cash and cash equivalents            14,000.00
Opening cash and cash equivalents            16,000.00
Closing cash and cash equivalents            30,000.00

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