Question

The net changes in the balance sheet accounts of Eusey, Inc. for the year 2018 are shown below:

Account		Debit		Credit
Cash		$   85,800
Accounts receivable				$   38,600
Allowance for doubtful accounts				10,900
Inventory		197,200
Prepaid expenses		19,500
Long-term investments				144,700
Land		381,000
Buildings		649,500
Machinery		100,000
Equipment				28,100
Accumulated depreciation:
Buildings				25,100
Machinery				20,800
Equipment		12,700
Accounts payable		191,000
Accrued liabilities				72,500
Dividends payable				128,000
Premium on bonds				36,000
Bonds payable				900,000
Preferred stock ($50 par)		60,000
Common stock ($510 par)				156,000
Additional paid-in capital—common				223,200
Retained earnings		87,200
		$1,783,900		$1,783,900

Additional information:
1.		Net income				$140,000
2.		Cash dividends of $128,000 were declared December 15, 2018, payable January 15, 2019. A 5% stock dividend was issued March 31, 2018, when the market value was $22.00 per share.
3.		The long-term investments were sold for $140,000.
4.		A building and land which cost $480,000 and had a book value of $350,000 were sold for $400,000. The cost of the land, included in the cost and book value above, was $20,000.
5.		The following entry was made to record an exchange of an old machine for a new one:
		Machinery		160,000
		Accumulated Depreciation—Machinery		40,000
		Machinery				60,000
		Cash				140,000
6.		A fully depreciated copier machine which cost $28,000 was written off.
7.		Preferred stock of $60,000 par value was redeemed for $80,000.
8.		The company sold 12,000 shares of its common stock ($10 par) on June 15, 2018 for $25 a share. There were 87,600 shares outstanding on December 31, 2018.
9.		Bonds were sold at 104 on December 31, 2018.
10.		Land that was condemned had a book value of $241,500. Proceeds received totaled $108,000.

Prepare a statement of cash flows (indirect method). Ignore tax effects. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Eusey, Inc. Statement of Cash Flows For the Year Ended December 31, 2018 Increase (Decrease) in Cash

Answer 1

Eusey Inc.,
Statement of Cash Flows
For the Year Ended December 31, 2018
Increase/Decrease in Cash
Cash Flow From Operating Activities:
Net Income			140,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense - Buildings	155,100	25,100+130,000
Depreciation expense - Machinery	60,800	20,800+40,000
Depreciation expense- Equipment	15,300	(12,700)+28,000
Gain on sale of land and building	50,000	400,000-350,000
Loss on sale of long-term investments	4,700	144,700-140,000
Decrease in Accounts Receivable (Net)	49,500
Increase in Inventory	(197,200)
Increase in Prepaid expenses	(19,500)
Decrease in Accounts Payable	(191,000)
Increase in Accrued Liabilities	72,500
Loss on Condemnation of land	133,500		133,700
Net Cash Provided By Operating Activities			273,700
Cash Flow From Investing Activities
Sale of Long-term Activities	140,000	Given
Proceeds from Condemnation of land	108,000	Given
Purchase of land	(642,500)	381,000+241500+20,000
Sale of Building and Land	400,000	Given
Purchase of Building	(1,109,500)	649,500+460,000
Purchase of Machinery	(140,000)	Given
Net Cash Used by Investing Activities			(1,244,000)
Cash Flow from Financing Activities
Sale of Bonds	936,000	900,000+36,000
Retirement of preferred stock	(80,000)	Given
Sale of Common Stock	300,000	12,000*25
Net Cash Provided By Financing Activities			1,156,000
Net Increase in Cash			185,700