Question

Yoric Company listed the net changes in its balance sheet accounts for the past year as follows:

	Debits > Credits by:		Credits > Debits by:
Cash	$	68,500
Accounts receivable		170,500
Inventory			$	63,200
Prepaid expenses		4,600
Long-term loans to subsidiaries				83,000
Long-term investments		95,000
Plant and equipment		328,000
Accumulated depreciation				65,900
Accounts payable				49,600
Accrued liabilities		5,400
Income taxes payable				9,700
Bonds payable				202,000
Common stock				122,000
Retained earnings				76,600
	$	672,000	$	672,000

  

The following additional information is available about last year’s activities:

  

a.	Net income for the year was $    ?    .
b.	The company sold equipment during the year for $35,800. The equipment originally cost $160,500 and it had $126,700 in accumulated depreciation at the time of sale.
c.	Cash dividends of $10,500 were declared and paid during the year.
d.	The beginning and ending balances in the Plant and Equipment and Accumulated Depreciation accounts are given below:

	Beginning	Ending
Plant and equipment	$ 2,865,000	$ 3,193,000
Accumulated depreciation	$ 984,500	$ 1,050,400

   

e.	The balance in the Cash account at the beginning of the year was $109,100; the balance at the end of the year was $       ? .
f.	If data are not given explaining the change in an account, make the most reasonable assumption as to the cause of the change.

   

Required:

Using the indirect method, prepare a statement of cash flows for the year. (List any deduction in cash and cash outflows as negative amounts.)

   

Answer 1

Statement of Cash flow
For the Year
Cash flow from operating activities
(Indirect Method)
Net Income (Working # 1)					87,100
Depreciation expenses (Working # 2)					1,92,600
Profit on sale of equipment (Working # 3)					-2,000
Increase in accounts receivable					-1,70,500
decrease in inventory					63,200
Increase in prepaid expense					-4,600
Increase in accounts Payable					49,600
Decrease in accrued liabilities					-5,400
Increase in income tax payable					9,700
Cash flow from operating activities				a	2,19,700
Cash flow from Investing Activities:
Cash received from subsidiary					83,000
Long term investment made					-95,000
Sale of equipment					35,800
Equipment bought		(Working # 4)			-4,88,500
Cash flow investing activities				b	-4,64,700
Cash flow from financing activities:
Issuance of bonds payable					2,02,000
Issuance of common stock					1,22,000
Dividend paid					-10,500
Cash flow from financing Activities				c	3,13,500
Cash flow for the year			d=	a+b+c	68,500
Beginning Cash balance			e		1,09,100
Ending Cash balance			d+e		1,77,600
Working:
# 1
Increase in retained Earning					76,600
Dividend declared and paid					10,500
Net Income					87,100
# 2
Beginning Accumulated dereciation					9,84,500
Less:Accumulated depreciation on sold equipment					1,26,700
				a	8,57,800
Ending Accumulated depreciation				b	10,50,400
Depreciation expenses				b-a	1,92,600
# 3
Sale price					35,800
Less:Book Value
Cost of equipment				1,60,500
Accumulated depreciation				-1,26,700	33,800
Profit on sale					2,000
# 4
Plant and equipment-Beginning					28,65,000
Less:Cost of sold equipment					1,60,500
			a		27,04,500
Plant and equipment-Ending			b		31,93,000
Equipment bought			b-a		4,88,500