In: Accounting
The comparative Balance Sheets and the Income statement for the Marine Corporation are as follow:
Marine Corporation | Balance Sheet | |
Assets | 2018 | 2019 |
Cash | $45,000 | $50,000 |
Marketable Securities | 175,000 | 160,000 |
Accounts Receivable | 240,000 | 220,000 |
Inventories | 230,000 | 275,000 |
Investments | 70,000 | 55,000 |
Total current assets | $760,000 | $760,000 |
Plant and Equipment | 1,300,000 | 1,550,000 |
Less Accumulated Amortization | 450,000 | 600,000 |
Net plant and Equipment | $850,000 | $950,000 |
Total Assets | 1,610,000 | 1,710,000 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
Accounts payable | $110,000 | $85,000 |
Notes payable | 65,000 | 10,000 |
Accrued Expenses | 30,000 | 5,000 |
Income Taxes Payable | 5,000 | 10,000 |
Bonds Payable (2016) | 800,000 | 900,000 |
Common Stock (100,000 shares) | 200,000 | 200,000 |
Retained Earnings | 400,000 | 500,000 |
Total Liabilities’ and Shareholders’ Equity | $1,610,000 | $1,710,000 |
Marine Corporation | |
Sales | $ 5,500,000 |
Less: Cost of Goods Sold | 4,200,000 |
Gross Profit | 1,300,000 |
Less: Selling, General & Administrative Expenses | 260,000 |
Operating profit | 1,040,000 |
Less: Amortization Expense | 150,000 |
Earnings Before Interest and Taxes | 890,000 |
Less: Interest Expense | 90,000 |
Earnings Before Taxes | 800,000 |
Less: Taxes (50%) | 400,000 |
Net Income | $ 400,000 |
Required:
Prepare a Statement of Cash Flows in good form for the year ended December 31, 2019 using the Indirect Method?
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Workings- Indirect Method | |
Decrease in Marketable Securities | Amount $ |
Closing Balance | 160,000.00 |
Less: Opening Balance | 175,000.00 |
Decrease in Marketable Securities | (15,000.00) |
Decrease in Accounts Receivable | |
Closing Balance | 220,000.00 |
Less: Opening Balance | 240,000.00 |
Decrease in Accounts Receivable | (20,000.00) |
Increase in Inventory | |
Closing Balance | 275,000.00 |
Less: Opening Balance | 230,000.00 |
Increase in Inventory | 45,000.00 |
Decrease in Investments | |
Closing Balance | 70,000.00 |
Less: Opening Balance | 55,000.00 |
Decrease in Investments | 15,000.00 |
Decrease in Accounts Payable | |
Closing Balance | 85,000.00 |
Less: Opening Balance | 110,000.00 |
Decrease in Accounts Payable | (25,000.00) |
Decrease in Accrued Expenses | |
Closing Balance | 5,000.00 |
Less: Opening Balance | 30,000.00 |
Decrease in Accrued Expenses | (25,000.00) |
Increase in Income Taxes Payable | |
Closing Balance | 10,000.00 |
Less: Opening Balance | 5,000.00 |
Increase in Income Taxes Payable | 5,000.00 |
Decrease in Notes payable | |
Closing Balance | 10,000.00 |
Less: Opening Balance | 65,000.00 |
Decrease in Notes payable | (55,000.00) |
Plant and Equipment purchased | |
Closing Balance | 1,550,000.00 |
Less: Opening Balance | 1,300,000.00 |
Plant and Equipment purchased | 250,000.00 |
Bonds Payable Issued | |
Closing Balance | 900,000.00 |
Less: Opening Balance | 800,000.00 |
Bonds Payable Issued | 100,000.00 |
Dividends paid | |
Opening Balance- Retained Earnings | 400,000.00 |
Add: Net Income | 400,000.00 |
Less: Closing Balance- Retained Earnings | 500,000.00 |
Dividends paid | 300,000.00 |
Marine | ||
Cashflow statement | Amount $ | Amount $ |
Particulars | ||
Net Income | 400,000.00 | |
Adjustment to reconcile Net Income to Net Cash | ||
Add: | ||
Amortization Expense | 150,000.00 | |
Cash flow from Operations | 550,000.00 | |
Changes in Current Assets/Current Liabilities | ||
Decrease in Marketable Securities | 15,000.00 | |
Decrease in Accounts Receivable | 20,000.00 | |
Increase in Inventory | (45,000.00) | |
Decrease in Investments | 15,000.00 | |
Decrease in Accounts Payable | (25,000.00) | |
Decrease in Notes payable | (55,000.00) | |
Decrease in Accrued Expenses | (25,000.00) | |
Increase in Income Taxes Payable | 5,000.00 | (95,000.00) |
Net cash provided by operating activities | 455,000.00 | |
Cash flow from investing activities | ||
Plant and Equipment purchased | (250,000.00) | |
Net cash use for investing activities | (250,000.00) | |
Cash flow from financing activities | ||
Bonds Payable Issued | 100,000.00 | |
Dividends paid | (300,000.00) | |
Net cash used for financing activities | (200,000.00) | |
Net Increase/(Decrease) in cash | 5,000.00 | |
Cash Balance, beginning | 45,000.00 | |
Cash Balance, ending | 50,000.00 |