Question

In: Accounting

Selected financial statement information and additional data for Ronis Co. is presented below. Use this information...

Selected financial statement information and additional data for Ronis Co. is presented below. Use this information to answer the next (3) questions concerning in preparing a statement of cash flows for the year ending December 31, 2017.

2016                                             2017

Cash...........................................................        $60,000                                    $122,000

Accounts receivable (net)................................          67,000                                      100,000

Inventory....................................................        210,000                                      198,000

Land...........................................................        350,000                                      300,000

Equipment...................................................        385,000                                      405,000

Accumulated depreciation...............................     (280,000)                                   (260,000)

TOTAL............................................     $792,000                                    $865,000

Accounts payable..........................................          42,000                                         40,000

Bonds payable - long-term...............................        225,000                                      260,000

Common stock..............................................        250,000                                      250,000

Retained earnings..........................................        275,000                                      315,000

TOTAL............................................ $ 792,000                                     $865,000

Additional data for 2017:

1.     Net income was $70,000.

2.     Depreciation was recorded for 2017.

3.     Land was sold for $65,000 cash, and no land was purchased this year.

4.     Equipment with an original cost of $100,000 and book value of $55,000 was sold for a loss of $5,000.

4.     Dividends were declared and paid.

5.     Equipment was purchased for cash.

6.     A long-term bond was issued for cash.

QUESTION:

1) What is the Cash flow from operations?

2) What is the cash flow from investing?

3) What is the cash flow from financing?

please show work!

Solutions

Expert Solution

Ronis Co.

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2017
Cash flow from operating activity
Net Income 70000
Adjustment to reconcile net income to net cash flow from operating activity
Depreciation 25000
loss on sale of equipment 5000

Gain on sale of land   [65000-(350000-300000)]

 (15000)
Increase in accounts receivable [100000-67000] (33000)
Decrease in inventory [210000-198000] 12000
Decrease in accounts payable [42000-40000] (2000)
(8000)
net cash flow from operating activity 62000
cash flow from investing activity
sale of land 65000
sale of equipment [55000-5000loss] 50000
purchase of equipment   [385000-100000-405000] (120000)
net cash flow from investing activity (5000)
net cash flow from financing activity
long term debt [260000-225000] 35000
dividend paid [275000 beginning retained earning +70000net income-315000] (30000)
net cash flow from financing activity 5000
increase/(decrease in cash during the year [62000-5000+5000] 62000
Beginning cash balance 60000
Cash at end 122000

**Depreciation for year = Accumulated depreciation at end + depreciation on asset sold -Accumulated depreciation at beginning

         = 260000+45000-280000

         = 25000

ekkarill92 answered 1 year ago
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