Question

The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is shown as follows:

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$625,080.00	$586,430.00
4	Accounts receivable (net)	228,260.00	209,470.00
5	Inventories	641,070.00	616,400.00
6	Investments	0.00	240,170.00
7	Land	327,640.00	0.00
8	Equipment	705,000.00	552,830.00
9	Accumulated depreciation-equipment	(165,670.00)	(148,610.00)
10	Total assets	$2,361,380.00	$2,056,690.00
11	Liabilities and Stockholders’ Equity
12	Accounts payable (merchandise creditors)	$425,090.00	$405,900.00
13	Accrued expenses payable (operating expenses)	43,140.00	52,460.00
14	Dividends payable	23,780.00	19,970.00
15	Common stock, $4 par	147,000.00	96,000.00
16	Paid-in capital: Excess of issue price over par—common stock	417,200.00	279,600.00
17	Retained earnings	1,305,170.00	1,202,760.00
18	Total liabilities and stockholders’ equity	$2,361,380.00	$2,056,690.00

Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows:

A.	The investments were sold for $280,150 cash.
B.	Equipment and land were acquired for cash.
C.	There were no disposals of equipment during the year.
D.	The common stock was issued for cash.
E.	There was a $197,450 credit to Retained Earnings for net income.
F.	There was a $95,040 debit to Retained Earnings for cash dividends declared.

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section.

Answer 1

	Statement of cash flow
	cash from operating activities
	Net income for the year					197,450
	Adjustment to reconcile net income to
	cash from operating activities
	Depreciation expense					17060
	Gain on sale of investments					-39980
	increase in accounts receivable					-18790
	increase in inventories					-24670
	increase in accounts payable					19190
	Decrease in accrued expenses payable					-9320
	Net cash flow from operating activities						140,940
	Cash from investing activities
	cash from sale of investment					280,150
	cash used for purchase of land					-327,640
	cash used for purchase of Equipment					-152170
	Cash used by investing activities						-199,660
	Cash from financing activities
	cash from stock issue					188600
	cash dividends		(95040+19970-23780)			-91230
	Cash from financing activities						97,370
	Net increase in cash						38,650
	Cash at the beginning						586,430
	cash at year end						625,080