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 $ 420 $ 170   Accounts receivable 430 230     Inventory 580 370     Land 550 545     Building 900 900      Less: Accumulated depreciation (250) (210)   Equipment 2,700 2,390      Less: Accumulated depreciation (409) (380)   Patent 1,400 1,500 $ 6,321 $ 5,515     Liabilities   Accounts payable $ 680 $ 480   Accrued expenses payable 190 115   Lease liability—land 150 0   Shareholders' Equity   Common stock 3,160 3,000     Paid-in capital—excess of par 500 490     Retained earnings 1,641 1,430   $ 6,321 $ 5,515 METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2016 ($ in 000s)   Revenues      Sales revenue $ 2,608      Gain on sale of land 50   $ 2,658     Expenses      Cost of goods sold $ 880      Depreciation expense—building 40      Depreciation expense—equipment 272      Loss on sale of equipment 10      Amortization of patent 100      Operating expenses $ 550 1,852   Net income $ 806 Additional information from the accounting records: a. During 2016, equipment with a cost of $270,000 (90% depreciated) was sold. b. The statement of shareholders’ equity reveals reductions of $170,000 and $425,000 for stock dividends and cash dividends, respectively. Required: Prepare the statement of cash flows for Metagrobolize Industries using the indirect method. (Enter your answers in thousands. (i.e., 10,000 should be entered as 10).) Amounts to be deducted should be indicated with a minus sign.) METAGROBOLIZE INDUSTRIES Statement of Cash Flows For year ended December 31, 2016 ($ in 000s) Adjustments for noncash effects: Changes in operating assets and liabilities:

Answer 1

Formula sheet

A	B	C	D	E	F	G
2
3		All numbers in 000s
4			2016	2015	Increase/ (Decrease)
5		Assets
6		Cash	420	170	=D6-E6
7		Accounts Receivable	430	230	=D7-E7
8		Inventory	580	370	=D8-E8
9		Land	550	545	=D9-E9
10		Building	900	900	=D10-E10
11		Less: Accumulated Depreciation	-250	-210	=D11-E11
12		Equipment	2700	2390	=D12-E12
13		Less: Accumulated Depreciation	-409	-380	=D13-E13
14		Patent	1400	1500	=D14-E14
15		Total Assets	=SUM(D6:D14)	=SUM(E6:E14)	=D15-E15
16
17		Liabilities and Shareholders Equities
18		Accounts Payable	680	480	=D18-E18
19		Accrued Expenses Payable	190	115	=D19-E19
20		Lease Liability - Land	150	0	=D20-E20
21		Shareholder's Equity
22		Common Stock	3160	3000	=D22-E22
23		Paid in Capital	500	490	=D23-E23
24		Retained earnings	1641	1430	=D24-E24
25		Total liabilities and shareholders equity	=SUM(D18:D24)	=SUM(E18:E24)	=D25-E25
26
27
28		Income Statement 2016
29		Sales Revenue	2608
30		Gain on Sale of Land	50	=D29+D30
31		Expenses
32		Cost of goods sold	880
33		Depreciation expense—building	40
34		Depreciation expense—equipment	272
35		Loss on sale of equipment	10
36		Amortization of patent	100
37		Operating expenses	550	=SUM(D32:D37)
38		Net income		=E30-E37
39
40		Additional Information
41		Cost of Equipment Sold	270
42		Depreciation of Equipment Sold	=D41*90%
43		Stock Dividends	170
44		Cash Dividends	425
45		Increase in current asset decreases the cash in hand and increase
46		in current liaiblities increase the cash in hand and vice versa.
47		Cash flow statement using indirect method(in 000):
48
49		Cash Flows from operating activities
50		Net Income	=E38
51		Adjustments for non cash effects
52		Depreciation expense—building	=D33
53		Depreciation expense—equipment	=D34
54		Amortization of Patent	100
55		Changes in operating assets and liabilities:
56		Add: Loss on sales of Equipment	=D35
57		Less: Gain on Sales of Land	=-D30
58		(Increase) in accounts receivable	=-F7
59		(Increase) in Inventories	=-F8
60		Increase in Accounts Payables	=F18
61		Increase in Accrued Expenses Payables	=F19
62		Net cash provided by operating activity		=D50+D52+D53+D54+SUM(D56:D61)
63
64		Cash Flows from investing activities
65		Cash flow from Sale of equipment	=D41-D42-D56
		Cash flow from Purchase of equipment	=-(D12-(E12-D41))
66		Cash flow from sale of Land	=E9+D20-D9+D30
67		Net cash provided by investing activity		=D65+D66+D67
68
69		Cash Flows from financing activities
71		Cash from payment of dividends	=-D44
72		Net cash provided by Financing Activity		=SUM(D71:D71)
73
74		Net change in Cash		=E62+E68+E72
75		Beginnig Cash Balance		=E6
76		Ending Cash Balance		=E75+E74
77
78		Non Cash Transactions:
79		Stocks Dividends	=D43
80