Question

Boca Inc.
Balance Sheets
December 31
		Assets						2018		2017
		Cash						60,800		48,400
		Accounts Receivable						87,800		38,000
		Inventory						102,850		112,500
		Prepaid Expenses						28,400		26,000
		Long-term Investments						138,000		109,000
		Plant Assets						347,000		242,500
		Accumulated depreciation						(50,000)		(52,000)
		Total						714,850		524,400
		Liabilities and Stockholders' Equity
		Accounts Payable						67,300		72,000
		Accrued Expenses Payable						21,000		13,500
		Dividends Payable						3,000		-
		Bonds Payable						170,000		146,000
		Common Stock						262,000		175,000
		Retained Earnings						191,550		117,900
		Total						714,850		524,400
Additional Information:
1. Old plant assets having an original cost of $57,500 and accumulated depreciation of $48,500 were sold for $1,500 cash.
2. A new plant asset was purchased directly in exchange for common stock valued at $42,000.
3. New bonds were issued at par for $60,000.
4. 2018 Net income was $154,480.
5. A $1,000 prior period adjustment was recorded in 2018 to correct an understatement of depreciation in 2015. The 2017 balance sheet is appropriately restated.
6. Accounting for the long-term investments was appropriately using the equity method. Boca’s share of investee net income was $20,000. Other changes in Long-term investments were caused by additional stock purchases. No dividends were received.
Required
1. Prepare a 2018 statement of cash flows using the indirect method. Use the textbook format (pages 1,339, 1,342, 1,345). Do not submit supporting computations.

Answer 1

Boca Inc
Statement of Cash Flows (Indirect Method)
For the Year ended Dec 31, 2018
Cash Flow from opearating activities:
Net Income		154,480.00
Add/(Less) non cash effects on operating activities
Depreciation expense - Equipment	45,500.00
Loss on sale of Plant	7,500.00
Inrease in Accounts Receivables	(49,800.00)
Decrease in Inventory	9,650.00
Increase in Prepaid Expenses	(2,400.00)
Decrease in Accounts Payable	(4,700.00)
Increase in Accrued Expenses Payable	7,500.00	13,250.00
Net Cash provided by operating activities		167,730.00
Cash flow from Investing Activities
Purchase of Plant	(120,000.00)
Sale of Plant	1,500.00
Purchase of long Term Liabilities	(9,000.00)
Net Cash used by Investing activities		(127,500.00)
Cash Flow from Financing Activities
Issue of Bonds Payable	60,000.00
Payment of Bonds Payable	(36,000.00)
Issue of Common stock	45,000.00
Cash Dividend Paid	(96,830.00)
Net Cash uesd by Financing activities		(27,830.00)
Net Increase / (Decrease) in Cash		12,400.00
Cash balance at the Dec 31, 2017		48,400.00
Cash balance at the end - Dec 31, 2018		60,800.00

Plant Assets
Particulars	Amt	Particulars	Amt
To Balance B/f	242,500.00	By Cash	1,500.00
To Common stock	42,000.00	By Depreciation	48,500.00
To Cash	120,000.00	By Loss on sale of Plant	7,500.00
		By Balance C/f	347,000.00
	404,500.00		404,500.00
Accumulated Dep.
Particulars	Amt	Particulars	Amt
To Plant & Equipment	48,500.00	By Balance b/f	52,000.00
To Balance C/f	50,000.00	By Prior Period djustment	1,000.00
		By Dep. Exp. (Bal. Fig.)	45,500.00
	98,500.00		98,500.00
Retained Earnings
Particulars	Amt	Particulars	Amt
To Prior Period adjustment	1,000.00	By Balance b/f	117,900.00
To Cash Dividend (Bal. Fig)	99,830.00	By Net Income	154,480.00
To Balance C/f	191,550.00	By Equity Income - LTCG	20,000.00
	291,380.00		292,380.00
Dividend Payable
Particulars	Amt	Particulars	Amt
To Dividend Paid (Bal. fig.)	96,830.00	By Balance b/f	-
		By Retained Earnings	99,830.00
To Balance C/f	3,000.00
	3,000.00		99,830.00