In: Accounting
2.) Scheeler Company has the following comparative balance sheet data available:
12/31/2018 |
12/31/2017 |
|
Cash |
$30,000 |
$80,000 |
Accounts Receivable, net |
160,000 |
100,000 |
Inventory |
100,000 |
70,000 |
Prepaid Rent |
20,000 |
10,000 |
Total Current Assets |
$310,000 |
$260,000 |
Equipment |
$400,000 |
$200,000 |
Accumulated Depreciation |
(60,000) |
(50,000) |
Total Assets |
$650,000 |
$410,000 |
Accounts Payable |
$50,000 |
$40,000 |
Salaries Payable |
40,000 |
40,000 |
Bonds Payable |
0 |
50,000 |
Common Stock, $10 par |
300,000 |
100,000 |
Additional Paid-in Capital |
50,000 |
0 |
Retained Earnings |
210,000 |
180,000 |
Total Liabilities & Stockholders' Equity |
$650,000 |
$410,000 |
Additional information:
1. The company reports net income of $100,000 and depreciation expense of $20,000 for the year ending December 31, 2018.
2. Dividends declared and paid in 2018, $70,000.
3. Equipment with a cost of $20,000 and accumulated depreciation of $10,000 was sold for $3,000.
4. New equipment was purchased for cash.
5. No common stock was retired during 2018.
Using the indirect method, prepare the statement of cash flows for the year ending December 31, 2018
Statement of Cash Flow | ||
Particulars | Amount | Total Amount |
Income | 100,000.00 | |
Loss on sale of equipment | 7,000.00 | |
Depreciation | 20,000.00 | |
Increase in AR | (60,000.00) | |
Increase in inventory | (30,000.00) | |
Increase in prepaid rent | (10,000.00) | |
Increase in AP | 10,000.00 | |
Change in Salaries payable | - | |
Cash flow from operating activities | 37,000.00 | |
Cash flow from Investing activities | ||
Sale of Equipment | 3,000.00 | |
Purchase of Equipment | (220,000.00) | |
Cash flow from Investing activities | (217,000.00) | |
Cash flow from Financing activities | ||
Issue of Stock | 200,000.00 | |
Issue of paid in capital | 50,000.00 | |
Payment of bonds | (50,000.00) | |
Dividends Paid | (70,000.00) | |
Cash flow from Financing activities | 130,000.00 | |
net change in cash and cash equivalents | (50,000.00) | |
Opening cash and cash equivalents | 80,000.00 | |
Closing cash and cash equivalents | 30,000.00 |