Public Administration - Municipal ACC106 Chapter Notes - Chapter 2: Deferral, Accounts Payable, Cash Flow
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Statement of Cash Flows
The following is a list of the items to be included in thepreparation of Warrick Company's 2016 statement of cash flows:
Net income, $59,200
Payment for purchase of building, $98,000
Increase in accounts receivable, $7,400
Proceeds from issuance of common stock, $37,100
Increase in accounts payable, $4,500
Proceeds from sale of land, $7,000
Depreciation expense, $12,600
Payment of dividends, $36,000
Gain on sale of land, $5,300
Decrease in inventory, $3,700
Payment for purchase of long-term investments, $9,600
Amortization of discount on bonds payable, $1,900
Proceeds from issuance of note, $18,000
Increase in deferred taxes payable, $5,000
Equipment acquired by capital lease, $19,500
Decrease in salaries payable, $2,300
Beginning cash balance, $20,300
Required
1. Prepare the statement of cash flows.
WARRICK COMPANY | ||
Statement of Cash Flows | ||
For Year Ended December 31, 2016 | ||
Operating Activities: | ||
Net income | $ | |
Adjustment for noncash income items: | ||
Add: Depreciation expense | ||
Add: Amortization of discount on bonds payable | ||
Add: Accumulated depreciation | ||
Less: Gain on sale of land | ||
Adjustments for cash flow effects from working capital items: | ||
Increase in accounts receivable | ||
Decrease in inventory | ||
Increase in accounts payable | ||
Decrease in salaries payable | ||
Net cash provided by operating activities | $ | |
Investing Activities: | ||
Payment for purchase of building | $ | |
Proceeds from sale of land | ||
Payment for purchase of long-term investments | ||
Net cash used for investing activities | ||
Financing Activities: | ||
Proceeds from issuance of common stock | $ | |
Payment of accounts payable | ||
Proceeds from issuance of note | ||
Net cash provided by financing activities | ||
Net Decrease in Cash | $ | |
Cash, January 1, 2016 | ||
Cash, December 31, 2016 | $ | |
Investing and Financing Activities Not Affecting Cash | ||
Investing Activities: | ||
Acquisition of equipment under capital lease | $ | |
Financing Activities: | ||
Incurrence of capital lease obligation for equipment |
The net income reported on the income statement for the currentyear was $364,000. Depreciation recorded on store equipment for theyear amounted to $14,500. Balances of the current asset and currentliability accounts at the beginning and end of the year are asfollows:
End of Year | Beginning of Year | |
---|---|---|
Cash | $43,210 | $38,400 |
Accounts receivable (net) | 31,360 | 29,020 |
Merchandise inventory | 39,590 | 45,160 |
Prepaid expenses | 4,740 | 3,670 |
Accounts payable (merchandise creditors) | 41,480 | 35,590 |
Wages payable | 21,910 | 22,970 |
Required:
A. | Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Refer to theAmount Descriptions list provided for the exact wording of theanswer choices for text entries. Use the minus sign to indicatecash outflows, cash payments, decreases in cash and for anyadjustments, if required. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B
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