Calloway Company reported the following balance sheet data for 2018 and 2017: 20
ID: 2412522 • Letter: C
Question
Calloway Company reported the following balance sheet data for 2018 and 2017:
2018
2017
Cash
$77,375
$22,955
Available-for-sale debt securities
(not cash equivalents)
15,500
85,000
Accounts receivable
80,000
68,250
Inventory
165,000
145,000
Prepaid insurance
1,500
2,000
Land, buildings, and equipment
1,250,000
1,125,000
Accumulated depreciation
(610,000)
(572,000)
Total assets
$979,375
$876,205
Accounts payable
$76,340
$148,670
Salaries payable
20,000
24,500
Notes payable (current)
25,000
75,000
Bonds payable
200,000
0
Common stock
300,000
300,000
Retained earnings
358,035
328,035
Total liabilities and shareholders' equity
$979,375
$876,205
Additional information for 2018:
(1.) Sold available-for-sale debt securities costing $69,500 for $74,000.
(2.) Equipment costing $20,000 with a book value of $5,000 was sold for $6,000.
(3.) Issued 6% bonds payable at face value, $200,000.
(4.) Purchased new equipment for $145,000 cash.
(5.) Paid cash dividends of $20,000. This was the only change to Retained Earnings other than Net Income.
Required:
Prepare a full statement of cash flows for 2018 in good form using the indirect method.
Also, for additional question:
1. costing 69,500 and sold for 7400, which account does it affect?
2. what is the relationship between "costing" "book value" "was sold for"
3. what is face value and which account it is
4. the teacher did not give me the net income, where can i find it
2018
2017
Cash
$77,375
$22,955
Available-for-sale debt securities
(not cash equivalents)
15,500
85,000
Accounts receivable
80,000
68,250
Inventory
165,000
145,000
Prepaid insurance
1,500
2,000
Land, buildings, and equipment
1,250,000
1,125,000
Accumulated depreciation
(610,000)
(572,000)
Total assets
$979,375
$876,205
Accounts payable
$76,340
$148,670
Salaries payable
20,000
24,500
Notes payable (current)
25,000
75,000
Bonds payable
200,000
0
Common stock
300,000
300,000
Retained earnings
358,035
328,035
Total liabilities and shareholders' equity
$979,375
$876,205
Explanation / Answer
Net Income = Ending Retained Earnings + Dividends - Beginning Retained Earnings = $ 358,035 + $ 20,000 - $ 328,035 = $ 50,000.
1. Available for sale debt securities:
2. Original cost of equipment sold : $ 20,000.
Book value : $ 5,000.
Therefore, accumulated depreciation on equipment sold : $ 20,000 - $ 5,000 = $ 15,000.
When an asset is sold, neither the cost of the asset nor the accumulated depreciation will remain the books.
Land , Buildings, Equipment:
Accumulated Depreciation:
Asset Disposal:
3. Face value is the maturity amount. or par value. If a security is issued at face value, it means that it was issued at par value: neither at a discount nor at a premium.
Calloway Company Statement of Cash Flows For the year 2018 Cash Flows from Operating Activities $ $ Net Income 50,000 Adjustments to reconcile net income to net cash flows from operations Depreciation 53,000 Gain on sale of investments (4,500) Gain on sale of equipment (1,000) Increase in accounts receivable (11,750) Increase in inventory (20,000) Decrease in prepaid insurance 500 Decrease in accounts payable (72,330) Decrease in salaries payable (4,500) Decrease in notes payable (50,000) (110,580) Net cash used in Operating Activities (60,580) Cash Flows from Investing Activities Proceeds from sale of Investments 74,000 Proceeds from sale of Equipment 6,000 Cash paid for acquisition of equipment (145,000) Net cash used in Investing Activities (65,000) Cash flows from Financing Activities Proceeds from issuance of Bonds Payable 200,000 Dividends paid (20,000) Net cash flows from Financing Activities 180,000 Net increase ( decrease) of cash and cash equivalents 54,420 Beginning cash and cash equivalents 22,955 Ending cash and cash equivalents 77,375Related Questions
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