MGA 301 Lecture Notes - Lecture 5: Retained Earnings, Cash Flow, Net Income
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DO IT! 12-2b
Prepare statement of cash flows—indirect method.
(LO 2), AP
Alex Company reported the following information for 2017.
ALEX COMPANY Comparative Balance Sheets December 31 | |||
---|---|---|---|
Assets | 2017 | 2016 | Change Increase/Decrease |
Cash | $ 59,000  | $ 36,000  | $ 23,000 Increase |
Accounts receivable | 62,000  | 22,000  |  40,000 Increase |
Inventory | 44,000  | -0- |  44,000 Increase |
Prepaid expenses | 6,000  | 4,000  | 2,000 Increase |
Land | 55,000  | 70,000  | 15,000 Decrease |
Buildings | 200,000  | 200,000  |  -0- |
Accumulated depreciation—buildings | (21,000) | (14,000) | 7,000 Increase |
Equipment | 183,000  | 68,000  | 115,000 Increase |
Accumulated depreciation—equipment | (28,000) | (10,000) | 18,000 Increase |
Totals | $560,000  | $376,000  | |
Liabilities and Stockholders' Equity | |||
Accounts payable | $ 43,000  | $ 40,000  | $  3,000 Increase |
Accrued expenses payable | -0- | 10,000  | 10,000 Decrease |
Bonds payable | 100,000  | 150,000  | 50,000 Decrease |
Common stock ($1 par) | 230,000  | 60,000  | 170,000 Increase |
Retained earnings | 187,000  | 116,000  | 71,000 Increase |
Totals | $560,000  | $376,000  |
ALEX COMPANY Income Statement For the Year Ended December 31, 2017 | ||
---|---|---|
Sales revenue | $941,000 | |
Cost of goods sold | $475,000 | |
Operating expenses | 231,000 | |
Interest expense | 12,000 | |
Loss on disposal of equipment | 2,000 | 720,000 |
Income before income taxes | 221,000 | |
Income tax expense | 65,000 | |
Net income | $156,000 |
Additionalinformation:
1.Operating expenses include depreciation expense of$40,000.
2.Land was sold at its book value for cash.
3.Cash dividends of $85,000 were declared and paid in 2017.
4.Equipment with a cost of $166,000 was purchased for cash.Equipment with a cost of $51,000 and a book value of $36,000 wassold for $34,000 cash.
5.Bonds of $50,000 were redeemed at their face value forcash.
6.Common stock ($1 par) of $170,000 was issued for cash.
Use this information to prepare a statement of cash flows usingthe indirect method. Answer the following questions:
a) Cash Flow from Operating Activities
b) Cash Flow from Investing Activities
c) Cash Flow from Financing Activities
I need the statement of cash flows for the Operating,Investingand Financing activities