In: Accounting
Swasey Company provided the following partial comparative balance sheets and the income statement for 20X2.
Swasey Company |
Comparative Balance Sheets |
At December 31, 20X1 and 20X2 |
1 |
20X1 |
20X2 |
|
2 |
Current assets: |
||
3 |
Cash |
$210,500.00 |
$645,500.00 |
4 |
Accounts receivable |
$750,000.00 |
$583,000.00 |
5 |
Inventories |
301,000.00 |
317,000.00 |
6 |
Long-term assets: |
||
7 |
Plant and equipment |
2,209,000.00 |
2,142,000.00 |
8 |
Accumulated depreciation |
(1,193,000.00) |
(1,257,000.00) |
9 |
Land |
998,000.00 |
1,444,500.00 |
10 |
Total assets |
$3,275,500.00 |
$3,875,000.00 |
11 |
Current liabilities: |
||
12 |
Wages payable |
$699,000.00 |
$514,000.00 |
13 |
Long-term liabilities: |
||
14 |
Bonds payable |
0.00 |
387,000.00 |
15 |
Mortgage payable |
104,500.00 |
0.00 |
16 |
Total liabilities |
$803,500.00 |
$901,000.00 |
17 |
Stockholders’ equity: |
||
18 |
Common stock |
373,000.00 |
373,000.00 |
19 |
Paid-in capital in excess of par |
275,000.00 |
275,000.00 |
20 |
Retained earnings |
1,824,000.00 |
2,326,000.00 |
21 |
Total stockholders’ equity |
2,472,000.00 |
2,974,000.00 |
22 |
Total liabilities and stockholders’ equity |
$3,275,500.00 |
$3,875,000.00 |
Swasey Company |
Income Statement |
For the Year Ended December 31, 20X2 |
1 |
Revenues |
$3,008,000.00 |
2 |
Gain on sale of equipment |
104,000.00 |
3 |
Cost of goods sold |
(1,915,000.00) |
4 |
Depreciation expense |
(272,000.00) |
5 |
Interest expense |
(13,000.00) |
6 |
Net income |
$912,000.00 |
During the year, Swasey Company sold equipment with a book value of $276,500 for $380,500 (original purchase cost of $484,500). New equipment was purchased.
Required: | |
1. | Prepare a statement of cash flows for Swasey for 20X2. |
2. | Reflect on the relationship between the statement of cash flows and the change in cash. |
Refer to the list below for the exact wording of a label or an amount description within your Statement of Cash Flows.
Amount Descriptions | |
---|---|
Add cost of goods sold | |
Add interest expense | |
Decrease in accounts receivable | |
Decrease in wages payable | |
Decrease in inventories | |
Depreciation expense | |
Gain on sale of equipment | |
Increase in accounts receivable | |
Increase in wages payable | |
Increase in inventories | |
Issuance of bonds payable | |
Loss on sale of equipment | |
Net cash from financing activities | |
Net cash from investing activities | |
Net cash from operating activities | |
Net decrease in cash | |
Net income | |
Net increase in cash | |
Net loss | |
Payment of dividends | |
Payment of mortgage | |
Purchase of equipment | |
Purchase of land | |
Receipt of dividends | |
Sale of equipment |
1. Prepare a statement of cash flows for Swasey for 20X2. (Note: Use a minus sign to indicate any decreases in cash or cash outflows. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.)
Swasey Company |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Cash Flows |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended December 31, 20X2
|
2. Complete the statement below regarding the relationship between the statement of cash flows and the change in cash.
The sum of the (operating and investing) or (operating,investing, and financing) or (investing and operating) or (operating and financing) cash flows must equal the change in (cash flow) or (net income) or (cash account).
.
Statement of cash flows | |||||||||
Cash flows from Operating activities | |||||||||
Net Income for the year | 912000 | ||||||||
Ajdustment | |||||||||
Depreciation | 272000 | ||||||||
Gain on sale of equipment | -104000 | ||||||||
Decease in accounts receivable | 167000 | ||||||||
Increase in inventries | -16000 | ||||||||
Decrease in wages payable | -185000 | ||||||||
Net cash provided from operating | 1046000 | ||||||||
Cash flows form investing activities: | |||||||||
sale of equipment | 380500 | ||||||||
Purchase of equipment (=2209000-484500-2142000) | -417500 | ||||||||
Purchase of land | -446500 | ||||||||
Net csh used in investing activities | -483500 | ||||||||
Cash flows from financing activities: | |||||||||
Issue of bonds | 387000 | ||||||||
Mortgage repaid | -104500 | ||||||||
Dividend paid | (1824000+912000-2326000) | -410000 | |||||||
Net cash used n financing activities | -127500 | ||||||||
Net cash increase | 435000 | ||||||||
Add: Beginning balance | 210500 | ||||||||
Ending balance | 645500 | ||||||||
The Sum of Operating or investing or financing activities cash flows must equal the c hange n cash flows |