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CAROLINA CORPORATION Comparative Statements of Financial Position December 31 2014 2013 Cash ..................................................... $ 43,000 $...

CAROLINA CORPORATION

Comparative Statements of Financial Position

December 31 2014 2013

Cash ..................................................... $ 43,000 $ 24,000

Accounts receivable, net .......................... 35,000 38,000

Inventory ............................................... 114,000 82,000

Land ...................................................... 120,000 190,000

Building ................................................. 200,000 200,000

Accumulated depreciation ......................... (50,000) (40,000)

Equipment ............................................. 1,030,000 600,000

Accumulated depreciation ......................... (118,000) (94,000)

$1,374,000 $1,000,000

Accounts payable .................................... $ 115,000 $ 100,000

4% Bonds payable .................................. 320,000 -0-

Common shares ...................................... 750,000 750,000

Retained earnings ................................... 189,000 150,000

$1,374,000 $1,000,000

Additional data:

1. Net income for the year was $84,000.

2. Cash dividends were paid.

3. Land was sold for $80,000.

4. Old equipment was sold for $70,000. This equipment had cost $150,000 and had accumulated depreciation of $60,000 to date of sale. New equipment was purchased to replace it.

Instructions: Prepare a statement of cash flows for calendar 2014, using the indirect method.

Solutions

Expert Solution

CAROLINA CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities:
Net income 84000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense 94000
Gain on sale of Land -10000
Loss on sale of Equipment 20000
Decrease in accounts receivable 3000
Increase in merchandise inventory -32000
Increase in accounts payable 15000
90000
Net cash provided by operating activities 174000
Cash flows from investing activities:
Cash payments to purchase Equipment -580000
Proceeds from sale of Equipment 70000
Proceeds from sale of Land 80000
Net cash used in investing activities -430000
Cash flows from financing activities:
Cash payments for dividends -45000
Proceeds from Bonds payable 320000
Net cash provided by financing activities 275000
Net increase in cash during the year 19000
Cash balance, January 1 24000
Cash balance, December 31 43000

ekkarill92 answered 9 months ago
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