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In: Accounting

23-2. December 31 2017                         2016 33,500              &nb

23-2. December 31

2017                         2016

33,500                         13,000 Cash

12,250                         10,000 Accounts Receivable

12,000                         9,000 Inventory

0                                  3,000 Long-Investments

0                                  29,750 Building

0                                  (6,000) Accumalted depreciation on building

45,000                         20,000 Equipment

(2,000)                        (4,500) Accumlated depreciation on equipment

5,000                           9,250 Patents

105,750                       83,500 Total Assets

5,000                           3,000 Accounts Payable

1,000                           5,000 Dividends Payable

4,000                           8,500 Short-term Notes Payables

32,000                         25,000 Long term notes payable

39,000                         30,000 Common stock

6,000                            3,000 Pain-in capital excess of par

18,750                         9,000 Retained Earnings

105,750                       83,500 Total

Additional data related to 2017 are as follows:

1. Long-term investments were sold at 1,700 above their cost.

2. On January 1, 2017 the building was completely destroyed by a flood. Insurance proceeds on the building were $30,000.

3. Equipment that had cost 11,000 and was 40% depreciated was sold for 2,500.

4. Common stock with a par value of 5,000 and a market value of 6,000 was issued to pay off part of the long-term note.

5. A new long-term note was issued for the acquisition of equipment.

6. Equipment was purchased for cash.

7. Dividends were of 7,000 were declared during 2017.

Prepare the statement of cash flows, including any significant non-cash transactions after the reconciliation. (SHOW ALL OF YOUR WORK PLEASE)

Solutions

Expert Solution

Statement of cash flows

Particulars Amount

Net income (18750-9000) 9750

Add: Depreciation on building 6000

: Depreciation on equipment 1900

: Loss on sale of equipment 4100   

   : Patents written off 4250

Less: profit on sale of long term investment (1700)

   :Increase in account receivables (2250)

: Increase in inventories (3000)

: decrease in dividend payable (4000)

   :decrease in short term notes payable (4500)

Add: Increase in account payable 2000

Net cash flow from operating activities 12250

Cash from insurance company 30000

cash from sale of equipment 2500

cash from sale of long term investment 4700

cash paid for purchase of equipment (36000)

cash paid for purchase of building (6250)

net cash used in investing activ ties (5050)

Cash from issue of stock 9000

procceds from issue of paid up capital 3000

proceeds from isssue of long term notes 13000

payment of long term note ( 6000)

dividend paid (7000)

Net cash flow from financing activities 12000

working notes:

Building A/c

to bal b/d 29750 by accumulated deoreciation 6000

to bank 6250 by bank 30000

by bla c/d 0

36000 36000

Equipment A/c

TO bal b/d 20000 by provision for dep 4400

to cash 36000 by bank 2500

by p& l 4100

by bal c/d 45000

56000 56000

Accumulated depreciation on equipmentA/c

to equipment 4400 by bal b/d 4500

to bal c/d 2000 by depreciaiton 1900

   6400 6400

Long term investment A/c

To bal b/d 3000 by bank 4700

to p&l 1700

   4700 4700

long term notes payable A/c

to cash 6000 by bal b/d 25000

to bal c/d 32000 by cash 13000

38000 38000

ekkarill92 answered 1 year ago
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