Question

Comparative balance sheets for 2016 and 2015 and a statement of income for 2016 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.

  

METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2016 and 2015 ($ in 000s)
		2016		2015
Assets
Cash	$	500	$	250
Accounts receivable		550		290
Inventory		700		400
Land		700		650
Building		800		800
Less: Accumulated depreciation		(250)		(215)
Equipment		3,000		2,750
Less: Accumulated depreciation		(355)		(320)
Patent		1,000		1,150
	$	6,645	$	5,755
Liabilities
Accounts payable	$	800	$	550
Accrued expenses payable		250		220
Lease liability—land		150		0
Shareholders' Equity
Common stock		2,660		2,500
Paid-in capital—excess of par		600		560
Retained earnings		2,185		1,925
	$	6,645	$	5,755

METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2016 ($ in 000s)
Revenues
Sales revenue	$	3,020
Gain on sale of land		80	$	3,100
Expenses
Cost of goods sold	$	1,000
Depreciation expense—building		35
Depreciation expense—equipment		440
Loss on sale of equipment		20
Amortization of patent		150
Operating expenses		600		2,245
Net income			$	855

Additional information from the accounting records:
a.	During 2016, equipment with a cost of $450,000 (90% depreciated) was sold.
b.	The statement of shareholders' equity reveals reductions of $200,000 and $395,000 for stock dividends and cash dividends, respectively.

Required:

Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2016. Present cash flows from operating activities by the direct method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.) METAGROBOLIZE INDUSTRIES Statement of Cash Flows For year ended December 31, 2016 ($ in 000s) Cash inflows: Cash outflows: $0 0 0 $0

Answer 1

Statement of Cash Flows
Operating activities:
Cash inflows:
From customers	2760
Cash outflows:
To suppliers of goods	1050
For operating expenses	570
Net cash flows from operating activities		1140
Investing activities:
Purchase of equipment	-700
Sale of land	130
Sale of equipment	75
Net cash flows from investing activities		-495
Financing activities:
Payment of cash dividends	-395
Net cash flows from financing activities		-395
Net increase in cash		250
Beginning cash Balance		250
Ending Cash Balance		500

Ending Stock balance	700
Add cost of goods sold	1000
Less Opening stock balance	400
Cost of goods Purchased	1300
Beginning Account Payable	550
Cost of goods Purchased	1300
less Ending Account Payable	800
To suppliers of goods	1050
Beginning Operating Expense	220
Operating expene	600
Less ending operating expense	250
For operating expenses	570
Beginning Book value Equipment	2750
Less Sold	450
Ending Book value Equipment	3000
Purchase of equipment	700
Sale of Land
Change in land	50
Add      Gain on sale of land	80
Sale of Land	130