Question

Complete the following questions. In addition to answering the items below, you must submit an analysis of the assignment. Analyze the specific outcomes and analysis directed toward the management team at Smart Company describing what the numbers mean and how they relate to the business. Submit journal entries in an Excel file and written segments in an MS Word document. For written answers, please make sure your responses are well-written, formatted per CSU-Global Guide to Writing and APA and have proper citations, where applicable.

You are the accountant for Smart Construction Company, a large construction company in Colorado. You have been presented with the following

financial information for Smart and asked to prepare the Statement of Cash Flows for the year ended June 30, 2017. You will complete all work for

the project in this excel file, which includes the following tabs: I have inputted some information in hopes that I can recieve correction in my entries. I also hope it clarifies what I am asking. This is the formatt the course gave.

1. Facts - Information taken from Smart's accounting records and additional information regarding the cash flows as of June 30, 2017.

2. Worksheet - Worksheet template (also see Example 21.3a in text).

3. Cash Flows - Statement of Cash Flows template (also see Example 21.3b in text). Account Balances 30-Jun-16 30-Jun-17 Debits Cash $361,700 $880,550 Accounts Receivable 100,000 125,000 Marketable Securities (at cost) 11,700 13,000 Allowance for Change in Value 1,500 1,800 Construction in Process 168,750 405,000 Prepaid Expenses 45,000 10,000 Investments (long-term) -    13,500 Leased Equipment -    20,000 Building 30,000 -    Deferred tax asset 5,375 2,200 Land 10,500 10,500 Discount on Bonds Payable -    1,305 Totals 734,525 1,482,855 Credits Allowance for doubtful accounts $6,000 $4,500 Accounts Payable 87,500 210,000 Deferred tax liability 1,000 3,300 Income Taxes Payable 3,500 9,000 Note Payable (long-term) 3,500 -    Accumulated Depreciation on Building 2,500 -    Accumulated Depreciation on Leased Asset -    3,000 Lease obligation -    18,000 Interest payable on lease obligation -    1,800 Interest payable (Bonds) -    1,800 Bonds payable -    45,000 Billings on contruction in process 150,000 325,000 Pension liability 150,000 400,000 Convertible preferred stock, $100 par 9,000 -    Common Stock, $10 par 14,000 24,500 Additional Paid-in Capital 8,700 13,700 Unrealized Increase in Value of Marketable Securities 1,500 1,800 Retained Earnings 297,325 421,455 Totals 734,525 1,482,855 Additional information: a. Dividends declared and paid totaled $650. b. 300 shares of common stock (at par) were issued for cash. c. On July 1, 2016, convertible preferred stock that had originally been issued at par value were converted into 500 shares of common stock. The book value method was used to account for the conversion. d. The long-term note payable was paid by issuing 250 shares of common stock at the beginning of the fiscal year. e. Short-term marketable securities were purchased at a cost of $1,300. The portfolio was increased by $300 to a $14,800 fair value at year-end by adjusting the related allowance account. f. During the year, a 30% interest in Ricochet Co. was purchased as an investment for $9,500. Ricochet reported $20,000 in net income for the year and paid dividends of $2,000 to Smart. g. $5,000 of accounts receivable were written off as uncollectible during the year. h. Smart’s inventory consists of Construction-in-Process in excess of the Billings on Construction-in-Process account balance. i. A building was destroyed by fire during the year and insurance proceeds of $26,000 were collected. j. The 12% bonds payable were issued on February 28, 2017, at 97. They mature on February 28, 2027. The company uses the straight-line method to amortize bond premiums and discounts. k. Smart recorded pension expense of $350,000 for the year. l. A lease agreement was signed on July 1st, 2016 for the use of equipment worth $20,000. The company determined that the transaction should be recorded as a capital lease.

SMART CONSTRUCTION COMPANY Cash Flows Worksheet For Year Ended June 30, 2017 Balances Change Worksheet Entries Account Titles 6/30/2016 6/30/2017 Increase (Decrease) Debit Credit Credit Debits Cash 361,700 880,550 518,850 Noncash Accounts: Accounts Receivable 100,000 125,000 25,000 Marketable Securities (at Cost) 11,700 13,000 1300 Allowance for change in value 1,500 1,800 300 Construction in Process 168,750 405,000 236,250 Prepaid Expenses 45,000 10,000 -35,000 Investment ( Long-Term) 13,500 13,500 Leased Equipment 20,000 20,000 Building 30,000 -30,000 Deferred tax Asset 5,375 2,200 -3,175 Land 10,500 10,500 0 Discount on Bonds Payable 1,305 1,305 Totals 734,525 1,482,855 1,408,330 Credits Allowance for doubtful accounts 6,000 4,500 -1,500 Accounts Payable 84,500 210,000 125,500 Deferred tax Liability 1,000 3,300 2,300 Income Taxes Payable 3,500 9,000 5,500 Note Payable (long-term) 3,500 -3,500 Accumulated Depreciation on Building 2,500 -2,500 Accumulated Depreciation on Leased Asset 3,000 3,000 Lease obligation 18,000 18,000 Interest payable on lease obligation 1,800 1,800 Interest payable (bonds) 1,800 1,800 Bonds Payable 45,000 45,000 Billings on Contruction in process 150,000 325,000 310,000 Pension liability 150,000 400,000 250,000 Convertible preferred stock, $100 par 9,000 -9,000 Common Stck, $10 par 14,000 24,500 10,500 Additional Paid-in Capital 8,700 13,700 5,000 Unrealized increase in value of markerable securities 1,500 1,800 300 Retaining earnings 297,325 421,455 124,130 Totals 734,525 1,482,855 1,408,330 Cash Flows from Operating Activities: Profit for the year 124,130 Adding Non Cash Items Add- Provision for tax 10975 Add- Interest on lease 1800 Add- Interest payable on bonds 1800 Add- Loss on discount on issue of bonds 1350 Add- Net Loss (30-60k) building destroyed 4000 Add- Depreciation 3000 Less- Allowance for change in provision 2500 Less- Accumlated Dep on Building 300 Add- Provision for dividend 650 Pension Liability Add- Charge to Pension liability 350000 Less- Pension liability actually paid 100000 Less- Profit of Ricochet Co included 6000 Add- Bills on construction in process 175000 Add- increase in accounts payable 122500 Less- Provision for DD for the year 3500 Add- increase in value of marketable securities 300 Add- decrease in prepaid expense 35000 Less- Increase in accounts receivable 30000 Net Cash Flow from Operating Activities 706375 695205 Cash Flows from Investing Activities: Less - Building Destroyed 26000 Add-Lease Equipment 18000 Add - Investment made 9500 Less - Increase in MS 1300 Add- Dividends from Ricochet 2000 Cash Flows from Financing Activities 219050 Investing and Financing Activities Not Affecting Cash: Add-Common Stock 3000 Add-Cash raised from Issue of bonds 43650 Less- Lease liability paid for the year 2000 Decrease in Note Payable Less- discount on bonds payable 1305 Less- Dividend paid 650 Net Increase in Cash: 695,205-219,050+42,695 76150 518850 Totals Smart Construction Company Statement of Cash Flows For Year Ended June 30, 2017 Operating Activities:      Net Income      Adjustments for noncash income items:       Adjustments from cash flow effect from working capital items:       Net cash provided (used) by operating activities Investing activities:     Net cash provided (used) by investing activities Financing Activities:     Net cash provided (used) by financing activities Net increase in cash (see Schedule 1) Cash, June 30, 2016 Cash, June 30, 2017 Schedule 1: Investing and Financing Activities Not Affecting Cash

Answer 1

Particulars	Amount($)
Net Income	124130
Adjustments for non cash items
Add- Provision for tax	10975
Add- Interest on lease	1800
Add- Interest payable on bonds	1800
Add- Loss on discount on issue of bonds	1350
Add- Net Loss (30-60k) building destroyed	4000
Add- Depreciation	3000
Less- Allowance for change in provision	-2500
Less- Accumlated Dep on Building	-300
Add- Provision for dividend	650
Pension Liability
Add- Charge to Pension liability	350000
Less- Pension liability actually paid	-100000
Less- Profit of Ricochet Co included	-6000
Add- Bills on construction in process	175000
Less- Provision for DD for the year	-3500
Add- increase in value of marketable securities	300
Total	560705
Adjustments from cash flow effect from working capital items:
Add- increase in accounts payable	122500
Add- decrease in prepaid expense	35000
Less- Increase in accounts receivable	-30000
Net cash provided (used) by operating activities	688205
Cash flow from investing activities
Less - Building Destroyed	-26000
Add-Lease Equipment	18000
Add - Investment made	9500
Less - Increase in MS	-1300
Add- Dividends from Ricochet	2000
Net cash used for Investing Activities	2200
Cash flow from Financing activities	219050
dd-Common Stock	3000
Add-Cash raised from Issue of bonds	43650
Less- Lease liability paid for the year	-2000
Decrease in Note Payable
Less- discount on bonds payable	-1305
Less- Dividend paid	-650
Net cash used for Financing Activities	42695
Net increase in cash	518850
Cash,30 June 2016	361700
Cash,30 June 2017	880550