the chief accountant for grandveiw corporation provides you with the companys 20
ID: 2417152 • Letter: T
Question
the chief accountant for grandveiw corporation provides you with the companys 2016 stateent of cash flows and income statement the acountant has asked for your help with some missing figures in the comopanys comprehensive balance sheets these financial statements are shown next ($ in millions)
Grandveiw corp
statement of cash flows
for the year ended decemeber 31 2016
cash flows from operating activities
Collection from customer 71
payment to supplier (30)
Payment of general an administrative expenses (18)
payment of income taxes (9)
net cash from operating activites 14
cash flows from investing activites:
sale of investments 65
Cash flows from financing activites:
issuance of common stock 10
Payment of divedends (3)
net cash flows from financing activites 7
net increase in cash 86
Grandveiw corporation
sales revenue 80
cogs 32
gross profit 48
operating expenses
General and admin. depreciation 18
Deprec. 10
total operating expenses 28
operating income 20
other income
gain on sale of invest. 15
income b4 taxes 35
income tax expense 7
net income 2
grandveiw corp
assets 2016 2015
cash 145 ?
a/r ? 84
investments - 50
inventory 60 ?
property plant equipment 150 150
less accumulated dep. (65) ?
total assets ? ?
liab. and shareholders equity
accounts payable to suplliers 40 30
payable for selling and admin. expenses 9 9
income tax payable 22 ?
common stock 240 230
retained earnings ? 47
total liabilites and shareholders equity ? ?
Required:
1. calculate missing amounts
2. Prepare the operating activites section of Grandveiw 2016 statement of cash fllows using the indirect method.
Show all your work!
Explanation / Answer
1. Grandview Corporation Balance Sheets (All amounts in $) 2016 2015 Assets Cash 145 59 Increase in Cash per Cash Flow is 86 Accounts Receivable 13 84 Collection from Customer 71 Investments 0 50 Inventory 60 25 Property, Plant and Equipment 150 150 Less : Accumulated Depreciation -65 -37 Depreciation Charge for 2016 is 10 + 18 = 28 Total Assets 303 331 Liabilities and Shareholders' Equity Accounts Payable to Suppliers 40 30 Payable for Selling and Admin Exp 9 9 Income Tax Payable 22 15 Income Tax Expense for 2016 7 Common Stock 240 230 Retained Earnings 49 47 Net Income for 2016 is 2 360 331 2. Cash Flows from Operating Activities Net Income for the year 2 Add : Depreciation Expense 28 Add : Income Tax Expense 7 Less : Gain on Sale of Investments -15 20 Cash Flow before Working Capital Changes 22 Add : Decrease in Accounts Receivable 71 Less : Increase in Inventory -35 Add : Increase in Accounts Payable 10 46 Cash Inflows from Operating Activities 68
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