Question

The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 and 2015, is as follows:

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$147,270.00	$180,220.00
4	Accounts receivable (net)	224,490.00	241,070.00
5	Merchandise inventory	321,930.00	299,210.00
6	Prepaid expenses	13,120.00	9,890.00
7	Equipment	655,170.00	536,180.00
8	Accumulated depreciation-equipment	(171,750.00)	(131,210.00)
9	Total assets	$1,190,230.00	$1,135,360.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$249,380.00	$237,500.00
12	Mortgage note payable	????0.00	336,240.00
13	Common stock, $10 par	73,000.00	23,000.00
14	Paid-in capital: Excess of issue price over par—common stock	460,000.00	310,000.00
15	Retained earnings	407,850.00	228,620.00
16	Total liabilities and stockholders’ equity	$1,190,230.00	$1,135,360.00

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

A.	Net income, $332,260
B.	Depreciation reported on the income statement, $84,950
C.	Equipment was purchased at a cost of $163,400 and fully depreciated equipment costing $44,410 was discarded, with no salvage realized.
D.	10,000 shares of common stock were issued at $20 for cash.
E.	The mortgage note payable was not due until 2018 but the terms permitted earlier payment without penalty.
F.	Cash dividends declared and paid, $153,030

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 and enter in the order listed on the Instructions page.

Labels and Amount Descriptions

Labels and Amount Descriptions
Cash paid for dividends
Cash paid for equipment
Cash paid for merchandise
Cash paid for purchase of equipment
Cash paid for purchase of land
Cash paid to retire mortgage note payable
Cash received from customers
Cash received from sale of common stock
December 31, 2016
Decrease in cash
Decrease in inventory
Decrease in accounts payable
Decrease in accounts receivable
Decrease in prepaid expenses
Depreciation
For the Year Ended December 31, 2016
Gain on disposal of equipment
Gain on sale of investments
Increase in accounts payable
Increase in accounts receivable
Increase in cash
Increase in inventory
Increase in prepaid expenses
Loss on disposal of equipment
Loss on sale of investments
Net cash flow from financing activities
Net cash flow from investing activities
Net cash flow from operating activities
Net cash flow used for financing activities
Net cash flow used for investing activities
Net cash flow used for operating activities
Net income
Net loss

Statement of Cash Flows

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 sectionand enter in the order listed on the Instructions page.

Del Ray Enterprises Inc.

Statement of Cash Flows

1	Cash flows from operating activities:
2
3	Adjustments to reconcile net income to net cash flow from operating activities:
4
5	Changes in current operating assets and liabilities:
6
7
8
9
10
11
12	Cash flows from investing activities:
13
14
15
16	Cash flows from financing activities:
17
18
19
20
21
22	Cash at the beginning of the year
23	Cash at the end of the year

Answer 1

STATEMENT SHOWING CASH FLOWs FOR THE YEAR ENDING 31 DEC, 2016
Cash flows from Operating Activities:							AMOUNT $
Net Income during the year						332,260
Adjustments to be made for reconciling net income to cashflows
Depreciation expense						84,950
Decrease in Accounts receivable						16,580
Increase in Inventory						-22,720
Increase in Prepaid insurance						-3,230
Increase in Accounts payable						11,880
Net Cash provided from Operating Activities							419,720
Cash Flows from Investing Activities:
Purchase of Equipment						-163,400
Net Cash used in Investing Activities							-163,400
Cash Flows from Financing Activities:
Mortgage Loan payable						-336,240
Dividend paid						-153,030
Issue of Common Stock						200,000
Net Cash used in Financing Activities							-289,270
Net Cash decrease during the year							-32,950
Add: Beginning balance of cash							180,220
Ending Balance of Cash							147,270