Question

The comparative balance sheets for 2016 and 2015 and the statement of income for 2016 are given below for Wright Company. Additional information from Wright's accounting records is provided also.

WRIGHT COMPANY Comparative Balance Sheets December 31, 2016 and 2015 ($ in 000s)
	2016		2015
Assets
Cash	$	103	$	75
Accounts receivable		116		120
Short-term investment		55		26
Inventory		118		115
Land		86		105
Buildings and equipment		630		490
Less: Accumulated depreciation		(169)		(120)
	$	939	$	811
Liabilities
Accounts payable	$	35	$	44
Salaries payable		3		6
Interest payable		8		6
Income tax payable		9		12
Notes payable		0		28
Bonds payable		246		190
Shareholders' Equity
Common stock		330		290
Paid-in capital—excess of par		173		145
Retained earnings		135		90
	$	939	$	811
WRIGHT COMPANY Income Statement For Year Ended December 31, 2016 ($ in 000s)   Revenues:    Sales revenue $ 520       Expenses:    Cost of goods sold $ 220        Salaries expense 73        Depreciation expense 49        Interest expense 18        Loss on sale of land 4       Income tax expense 66     430       Net income $ 90

Additional information from the accounting records:

a. Land that originally cost $19,000 was sold for $15,000.

b. The common stock of Microsoft Corporation was purchased for $29,000 as a short-term investment not classified as a cash equivalent.

c. New equipment was purchased for $140,000 cash.

d. A $28,000 note was paid at maturity on January 1.

e. On January 1, 2016, bonds were sold at their $56,000 face value.

f. Common stock ($40,000 par) was sold for $68,000.

g. Net income was $90,000 and cash dividends of $45,000 were paid to shareholders.

Required:

Prepare the statement of cash flows of Wright Company for the year ended December 31, 2016. Present cash flows from operating activities by the direct method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands (i.e., 5,000 should be entered as 5).

WRIGHT COMPANY Statement of Cash Flows For year ended December 31, 2016 ($ in 000s) Cash flows from operating activities: Cash inflows: Cash outflows: Net cash flows from operating activities. Cash flows from investing activities: Net cash flows from investing activities Cash flows from financing activities: Net cash flows from financing activities Cash balance, January 1 Cash balance, December 31

Answer 1

Cash flow indirect method
Cash flow from operating activities
Net income		90
Adjustments to reconcile the net income
Loss on sale of land	4
Depreciation expense	49
Changes in current asset and liabilities
decrease in accounts receivable	4
Increase in inventory	-3
Increase in short term investment	-29
Decrease in accounts payable	-9
Decrease in income tax payable	-3
Decrease in salaries payable	-3
Increase in interest payable	2
		12
Cash flow from operating activities		102
Cash flow from Investing activities
Equipment sold	0
Equipment purchased	-140
Land sold	15
Cash flow from Investing activities		-125

	Cash flow from Financing activities
	Bonds sold	56
	Notes payable	-28
	Common stock	40
	Paid in excess	28
	Dividend paid	-45
	Cash flow from Financing activities		51
	Net Cash and cash equivalent		28
Add	Beginning cash and cash equivalent		75
	Ending cash and cash equivalent		103