Question

Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.

METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s)
		2018			2017
Assets
Cash	$	405			$	245
Accounts receivable		350				190
Inventory		500				275
Land		500				450
Building		900				900
Less: Accumulated depreciation		(200	)			(180)
Equipment		2,500				2,150
Less: Accumulated depreciation		(325	)			(300	)
Patent		1,000				1,150
	$	5,630			$	4,880
Liabilities
Accounts payable	$	600			$	400
Accrued expenses payable		150				130
Lease liability—land		130				0
Shareholders' Equity
Common stock		3,100				3,000
Paid-in capital—excess of par		750				700
Retained earnings		900				650
	$	5,630			$	4,880

METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2018 ($ in 000s)
Revenues
Sales revenue	$	2,555
Gain on sale of land		30		$	2,585
Expenses
Cost of goods sold	$	800
Depreciation expense—building		20
Depreciation expense—equipment		160
Loss on sale of equipment		10
Amortization of patent		150
Operating expenses		600			1,740
Net income				$	845

Additional information from the accounting records:

A. Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2018.

B. During 2018, equipment with a cost of $150,000 (90% depreciated) was sold.

C.The statement of shareholders' equity reveals reductions of $150,000 and $445,000 for stock dividends and cash dividends, respectively.

Required:
Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)

Answer 1

METAGROBOLIZE INDUSTRIES
Statement of Cash Flows (Direct Method)
For the Year ended Dec 31, 2018
($ in 000s)
Cash Flow From opearting Activities
Cash recd from Customers	2,395.00
Cash Paid to Suppliers	(825.00)
Cash Paid For Operating Exp.	(580.00)
Cash Flow from Operating Activities		990.00
Cash flow from Investing Activities
Sale of Land	110.00
Purchase of Equipments	(500.00)
Sale of Equipment	5.00
Cash Flow / (used) from Investing activities		(385.00)
Cash Flow from Financing Activities
Cash dividend Paid	(445.00)
Cash Flow from Financing Activities		(445.00)
Net Increase / (Decrease) in Cash		160.00
Cash Beginning Balance - Dec 31, 2017		245.00
Cash Ending Balance - Dec 31, 2018		405.00

Calculation of Cash Recd. From Customers
Sales Revenue	2,555.00
Add: Op. Accounts Receivables - Dec 31, 2017	190.00
Total Due to Customers	2,745.00
Less: Cls. Accounts Receivable - Dec 31, 2018	(350.00)
Cash recd from Customers	2,395.00
Calculation of cash Paid to Suppliers
Cost of Goods Sold	800.00
Add: Closing Inventory as on Dec 31,2018	500.00
Balance	1,300.00
Less: opening Inventory - Dec 31, 2017	(275.00)
Purchases made during the year	1,025.00
Add: Opening Accounts Payable - Dec 31, 2017	400.00
Total amount Due	1,425.00
Less: Closing Accounts Payable - Dec 31, 2018	(600.00)
Cash Paid to Suppliers	825.00
Calculation of Cash paid for Opearting Exp
Operating Exp.	600.00
Add: Accrued Expenses Payable - Dec 31, 2017	130.00
Total Expenses Due	730.00
Less: Accrued Expenses Payable - Dec 31, 2018	(150.00)
Cash Paid for Operating Expenses	580.00