Question

In: Accounting

A comparative balance sheet and income statement is shown for Cruz, Inc.

 

A comparative balance sheet and income statement is shown for Cruz, Inc.

CRUZ, INC.
Comparative Balance Sheets
December 31, 2017
    2017       2016  
Assets              
Cash $ 99,000     $ 25,000  
Accounts receivable, net   42,800       53,100  
Inventory   89,600       99,700  
Prepaid expenses   5,600       4,400  
Total current assets   237,000       182,200  
Furniture   113,000       124,700  
Accum. depreciation—Furniture   (17,600 )     (9,400 )
Total assets $ 332,400     $ 297,500  
Liabilities and Equity              
Accounts payable $ 15,600     $ 21,900  
Wages payable   9,400       5,200  
Income taxes payable   1,500       2,700  
Total current liabilities   26,500       29,800  
Notes payable (long-term)   31,100       65,700  
Total liabilities   57,600       95,500  
Equity              
Common stock, $5 par value   238,600       190,000  
Retained earnings   36,200       12,000  
Total liabilities and equity $ 332,400     $ 297,500  
 

CRUZ, INC.
Income Statement
For Year Ended December 31, 2017

Sales   $509,400

Cost of goods sold    327,800

Gross profit    181,600

Operating expenses      

Depreciation expense$39,200    

Other expenses 92,900  132,100

Income before taxes    49,500

Income taxes expense    18,100

Net income   $31,400

   Required:
Use the indirect method to prepare the cash provided or used from operating activities section only of the statement of cash flows for this company. (Amounts to be deducted should be indicated with a minus sign.)

QS 12-12 Computing cash from asset sales LO P3

Furniture costing $57,700 is sold at its book value in 2017. Acquisitions of furniture total $46,000 cash, on which no depreciation is necessary because it is acquired at year-end. What is the cash inflow related to the sale of furniture?
  

 
 
     
Cash flows from operating activities    
     
Adjustments to reconcile net income to operating cash flow    
Income statement items not affecting cash    
     
Changes in current operating assets and liabilities    
Accounts payable decrease    
     
     
     
     
     
    0
    $0

QS 12-12 Computing cash from asset sales LO P3

Furniture costing $57,700 is sold at its book value in 2017. Acquisitions of furniture total $46,000 cash, on which no depreciation is necessary because it is acquired at year-end. What is the cash inflow related to the sale of furniture?
  

 
 
Furniture
Beg. bal.      
       
       
End. bal. 0    
 
Accumulated Depreciation
Beg. bal.      
       
       
End. bal. 0    
 
     
Cost  
Accumulated depreciation  
Book value (Cash received) $0

Solutions

Expert Solution

Cash Flow From Operating Activities- Cruz Inc.
Cash Flows From Operating Activities
Net Income $31,400
Adjustments To Reconcile Net Income To Net Cash Provided By Operations:
Depreciation Expense 39,200
Decrease in Accounts Receivable 10,300
Deccrease in Inventory 10,100
Increase in Prepaid Expense 1200
Decrease in Accounts Payable -6,300
Increase in Wages Payable 4,200
Decrease in Income Tax Payable -1200
Net Cash Provided By Operating Activities $88,900
Furniture
Beg. bal. $124,700.00
Acqusition of Asset $46,000.00
Asset Sold -$57,700.00
End. bal. $113,000.00
Accumulated Depreciation
Beg. bal. $9,400.00
Add: Depreciation Expense $39,200.00
Depreciaiton Expense for Asset Sold (9400+39200-17600) $31,000.00
End. bal. $17,600.00
Book Value of Furniture Sold= Cost of Furniture - Accumulated Depreciaiton
=57700-31000= $26700
Hence, Cash Inflow from Sales of Furniture will be : $26700

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