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In: Accounting

The comparative balance sheets for Wildhorse Co. as of December 31 are presented below. Wildhorse Co....

The comparative balance sheets for Wildhorse Co. as of December 31 are presented below.

Wildhorse Co.
Comparative Balance Sheets
December 31

Assets

2017

2016

Cash

$ 93,364

$ 61,785

Accounts receivable

68,650

79,634

Inventory

207,941

194,966

Prepaid expenses

20,979

28,833

Land

199,085

178,490

Buildings

274,600

274,600

Accumulated depreciation—buildings

(82,380

)

(54,920

)

Equipment

308,925

212,815

Accumulated depreciation—equipment

(61,785

)

(48,055

)

Total

$1,029,379

$928,148

Liabilities and Stockholders’ Equity

Accounts payable

$ 61,414

$ 49,428

Bonds payable

411,900

411,900

Common stock, $1 par

274,600

219,680

Retained earnings

281,465

247,140

Total

$1,029,379

$928,148


Additional information:

1. Operating expenses include depreciation expense of $57,666.
2. Land was sold for cash at book value.
3. Cash dividends of $16,476 were paid.
4. Net income for 2017 was $50,801.
5. Equipment was purchased for $126,316 cash. In addition, equipment costing $30,206 with a book value of $13,730 was sold for $10,984 cash.
6. 54,920 shares of $1 par value common stock were issued in exchange for land with a fair value of $54,920.


Prepare a statement of cash flows for the year ended December 31, 2017, using the indirect method.

Solutions

Expert Solution

Answer

Cash Flow Statement

Detail

Net

Cash Flow from Operating Activities

Net Income before taxes

       50,801

Add: Non cash and Non operating Expenses

Depreciation on Equipmeny

       30,206

Depreciation on Building

       27,460

Loss on sale of Equip.

         2,746

Working Capital Changes

Decrease in Accounts Receivable

       10,984

Increase in Inventory

    (12,975)

Decrease in Prepaid expenses

         7,854

Increase in Accounts Payable

       11,986

Cash Flow from Operating Activities (A)

    129,062

Cash Flow from Investing Activities

Sale of Equipment

       10,984

Purchases of Equipment

(126,316)

Sale of Land

       34,325

Cash Used in Investing Activities (B)

    (81,007)

Cash Flow from Financing Activities

Dividend Paid

    (16,476)

Cash used in Financing Activities ( C)

    (16,476)

Decrease in Cash (A+B+C)

       31,579

Opening Cash

       61,785

Closing Cash

       93,364

Euipment

Beg. Bal

   212,815

Bank

     10,984

Acc. Depreciation

     16,476

P&l (Profit on sale)

Loss

        2,746

Bank (Purchases)

   126,316

Closing Bal.

   308,925

Total

   339,131

Total

   339,131

Acc. Depreciation - Equipment

Beg. Bal

     48,055

Equipment (Sold) (Bal.)

     16,476

P&L (Current Year)

     30,206

Closing Bal.

     61,785

Total

     78,261

Total

     78,261

Land

Beg. Bal

   178,490

Bank

     34,325

Common Stock

     54,920

Closing Bal.

   199,085

Total

   233,410

Total

   233,410

ekkarill92 answered 1 year ago
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