Question

In: Accounting

The comparative balance sheets for Rothlisberger Company as of December 31 are presented below.

The comparative balance sheets for Rothlisberger Company as of December 31 are presented below.

ROTHLISBERGER COMPANY Comparative Balance Sheets December 31 Assets 2017 2016 $ 81,000 41,000 151,450 $ 45,000 62,000 Cash Accounts receivable Inventory Prepaid expenses Land 142,000 Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment 15,280 105,000 200,000 (60,000) 221,000 (45,000) 21,000 130,000 200,000 (40,000) 155,000 (35,000) Total $709,730 $680,000 Liabilities and Stockholders' Equity

 

Additional information:

1. Operating expenses include depreciation expense of $42,000 and charges from prepaid expenses of $5,720.

2. Land was sold for cash at book value.

3. Cash dividends of $20,000 were paid.

4. Net income for 2017 was $42,000.

5. Equipment was purchased for $88,000 cash. In addition, equipment costing $22,000 with a book value of $10,000 was sold for $6,000 cash.

6. Bonds were converted at face value by issuing 40,000 shares of $1 par value common stock.

 

Instructions

Prepare a statement of cash flows for the year ended December 31, 2017, using the indirect method.

Solutions

Expert Solution

Cash Flow from Operating Activities :-    
Net Income $42000  
Adjustment for Non operating Activities:-    
(+)Depreciation $42000  
(+) Loss on sale of Equipment $4000  
Adjustment for Working Capital changes:-    
(+) Decrease A/c Receivable $21000  
(-) Increase Inventory ($9450)  
(+) Decrease Prepaid Exp $5720  
(-)Increase A/c Payable $7730  
Cash Flow from Operating Activities (A) $113000 $113000
     
Cash Flow from Investing Activities :-    
(+)Sold Land $25000  
(-) Purchase Equipment ($88000)  
(+) Sold Equipment $6000  
Cash Flow from Investing Activities (B) ($57000) ($57000)
     
Cash Flow from Financing Activities :-    
(-) Dividend Paid ($20000)  
Cash Flow from Financing Activities (C) ($20000) ($20000)
Net Cash Inflow/(Outflow) (A+B+C)   $36000
Add Beginning Cash Balance   $45000
Ending Cash Balance   $81000
     
Non Cash Transactions:-    
Converted Bond Payable to common stock $40000  
     
     
Cash Flow from Operating Activities :-    
Net Income $42000  
Adjustment for Non operating Activities:-    
(+)Depreciation $42000  
(+) Loss on sale of Equipment $4000  

Junaid answered 3 years ago
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