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CHENG INC. Comparative Balance Sheets December 31 Assets 2017 2016 Cash $118,000 $47,800 Accounts receivable 91,600...

CHENG INC.
Comparative Balance Sheets
December 31
Assets
2017
2016
Cash
$118,000
$47,800
Accounts receivable
91,600
32,200
Inventory
113,000
102,900
Prepaid expenses
29,400
26,000
Investments
141,000
113,500
Equipment
265,700
241,600
Accumulated depreciation-equipment
(46,000
)
(51,400
)
Total
$712,700
$512,600
Liabilities and Stockholders’ Equity
Accounts payable
$111,300
$67,900
Accrued expenses payable
16,100
17,000
Bonds payable
110,700
149,500
Common stock
219,500
174,200
Retained earnings
255,100
104,000
Total
$712,700
$512,600

CHENG INC.
Income Statement
For the Year Ended December 31, 2017
Sales revenue$391,900
Less:
Cost of goods sold
$135,900
Operating expenses, excluding depreciation
11,600
Depreciation expense
29,500
Income tax expense
26,300
Interest expense
4,400
Loss on disposal of plant assets
7,500
215,200
Net income
$176,700

Additional information:

1.New equipment costing $79,400 were purchased for cash during the year.
2.Old equipment having an original cost of $55,300 was sold for $12,900 cash.
3.Bonds matured and were paid off at face value for cash.
4.A cash dividend of $25,600 was declared and paid during the year.

Prepare a statement of cash flows using the indirect method

Solutions

Expert Solution

CHENG INC
Statement of Cash flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net Income   $ 176,700
Adjustments to reconcile net income to ;
Depreciation expense $   29,500
Loss on disposal of plant asset $      7,500
Increase in accounts receivable $ (59,400)
Increase in inventory $ (10,100)
Increase in prepaid expense $   (3,400)
Increase in accounts payable $   43,400
Decrease in accrued expense payable $       (900)
$      6,600
Net cash provided by operating activities $ 183,300
Cash flows from investing activities
Cash received from sale of equipment $   12,900
Cash paid for purchase of equipment $ (79,400)
Cash paid for purchase of investment $ (27,500)
Net cash used by investing activities $ (94,000)
Cash flows from financing activities
Cash dividends paid $ (25,600)
Cash paid to retire bonds $ (38,800)
Cash received from issuance of common stock $   45,300
Net cash used by financing activities $ (19,100)
Net Increase in cash and cash equivalents $    70,200
Cash and cash equivalents at beginning of period $    47,800
Cash and cash equivalents at end of period $ 118,000

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