The balance sheet for Plasma Screens Corporation, along with additional informat
ID: 2406369 • Letter: T
Question
The balance sheet for Plasma Screens Corporation, along with additional information, are provided below:
Additional Information for 2018:
1. Net income is $75,000.
2. The company purchases $114,000 in equipment.
3. Depreciation expense is $154,000.
4. The company repays $115,000 in notes payable.
5 .The company declares and pays a cash dividend of $28,000.
Prepare the statement of cash flows using the indirect method.
PLASMA SCREENS CORPORATIONBalance Sheets
December 31, 2018 and 2017 2018 2017 Assets: Current assets: Cash $ 116,500 $ 136,800 Accounts receivable 80,400 95,000 Inventory 101,000 85,400 Prepaid rent 5,200 2,600 Long-term assets: Land 510,000 510,000 Equipment 814,000 700,000 Accumulated depreciation (434,000) (280,000)
Total assets $ 1,193,100 $ 1,249,800
Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $ 105,000 $ 90,400 Interest payable 6,900 13,800 Income tax payable 9,200 5,600 Long-term liabilities: Notes payable 115,000 230,000 Stockholders' equity: Common stock 730,000 730,000 Retained earnings 227,000 180,000
Total liabilities and stockholders' equity $ 1,193,100 $ 1,249,800
Additional Information for 2018:
1. Net income is $75,000.
2. The company purchases $114,000 in equipment.
3. Depreciation expense is $154,000.
4. The company repays $115,000 in notes payable.
5 .The company declares and pays a cash dividend of $28,000.
Prepare the statement of cash flows using the indirect method.
Explanation / Answer
PLASMA SCREENS CORPORATION Statement of Cash flows For the Year ended December 31, 2018 Cash flow from operating activities: Net Income $ 75,000 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation Expense 1,54,000 Decrease of accounts receivable 14,600 Increase of inventory -15,600 Increase of Prepaid rent -2,600 Increase of accounts payable 14,600 Decrease of interest payable -6,900 Increase of income tax payable 3,600 Net Cash provided by operating activities 2,36,700 Cash flow from Investing Activities: Purchase of Equipment -1,14,000 Net Cash used by Investing Activities -1,14,000 Cash flow from financing activities: Repayment of notes payable -1,15,000 Cash dividend paid -28,000 Net Cash used by Financing Activities -1,43,000 Change in cash during the year -20,300 Cash at the end of 2017 1,36,800 Cash at the end of 2018 1,16,500
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