Question

Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.

METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s)
		2018			2017
Assets
Cash	$	450			$	160
Accounts receivable		490				260
Inventory		640				385
Land		650				590
Building		800				800
Less: Accumulated depreciation		(250	)			(230)
Equipment		2,850				2,570
Less: Accumulated depreciation		(472	)			(440	)
Patent		1,700				1,950
	$	6,858			$	6,045
Liabilities
Accounts payable	$	740			$	440
Accrued expenses payable		220				155
Lease liability—land		130				0
Shareholders' Equity
Common stock		2,600				2,500
Paid-in capital—excess of par		600				515
Retained earnings		2,568				2,435
	$	6,858			$	6,045

METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2018 ($ in 000s)
Revenues
Sales revenue	$	2,839
Gain on sale of land		65		$	2,904
Expenses
Cost of goods sold	$	940
Depreciation expense—building		20
Depreciation expense—equipment		356
Loss on sale of equipment		10
Amortization of patent		250
Operating expenses		600			2,176
Net income				$	728

Additional information from the accounting records:

Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2018.

During 2018, equipment with a cost of $360,000 (90% depreciated) was sold.

The statement of shareholders' equity reveals reductions of $185,000 and $410,000 for stock dividends and cash dividends, respectively.

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

METAGROBOLIZE INDUSTRIES Statement of Cash Flows For year ended December 31, 2018 ($ in 000s) Cash flows from operating activities: Cash inflows: From customers Cash outflows: To suppliers of goods For operating expenses Net cash flows from operating activities $0 Cash flows from financing activities: Purchase of equipment Sale of land Sale of equipment Net cash flows from investing activities 0 Cash flows from financing activities: Payment on lease liability Payment of stock dividends Net cash flows from financing activities 0 Net increase in cash Cash balance, January 1 Cash balance, December 31 $0 Noncash investing and financing activities: Acquired land

Answer 1

METAGROBOLIZE INDUSTRIES
Statement of Cashflows
For the Year Ended December 31, 2018
($ '000)
Cash Flows from operating activities
Cash Inflows:
From Customers	2609
Cash Outflows:
To Suppliers of Goods	-895
For Operating Expenses	-535
Net Cashflow from Operating activities		1179
Casfhflow from Financing activities
Purchase of Equipment	-640
Sale of Land	155
Sale of Equipment	26
Net Cashflow from Investing Activity		-459
Cashflows from financing activity
Payment of Lease Liability	-20
Payment of Cash Dividend	-410
Net Cashflows from Financing Activities		-430
Net Increase in Cash		290
Cash Balance January 1		160
Cash Balance December 31		450
Noncash Investing and Financing Activities
Acquired Land		150

Cash from Customers
Opening Accounts Receivable	260
Add: Sales Revenue	2839
Less : Closing Accounts Receivable	490
Cash from Customers	2609
Cash Payments to suppliers
Closing Inventory	640
Add: COGS	940
Less; Opening Inventory	385
Purchases	1195
Opening accounts Payable	440
Add: Purchases	1195
Less: Closing Accounts Payable	740
Cash Payments to suppliers	895
Opening Accrued Expenses Payable	155
Add: Operating Expenses	600
Less: Closing Accrued Expenses Payable	220
Cash Payment for Operating Expenses	535
Closing Equipment Balance	2850
Add: Equipment sold	360
Less: Opening Equipment Balance	2570
Equipment Purchased	640
Opening Balance of Land	590
Add: Land Purchased	150
Less: Closing Balance	650
Land sold	90
Gain on sale	65
Cash received on sale	155

Cost of Equipment	360
Depreciation	324
Salvage Value	36
Loss on Sale of Equipemnt	10
Cash received	26