following information to prepare Pumpkins Statement of Cash Flows for 2016. Pump

Question

following information to prepare Pumpkins Statement of Cash Flows for 2016. Pumpkins Inc. Comparative Balance Sheets 12/31/2015 12/31/2016 Assets: Cash 357,000 1,357,800 AR 100,000 90,000 Prepaid Insurance 15,000 12,000 Inventory 180,000 205,000 Investments 50,000 42,000 Truck 100,000 114,500 Accum. Depreciation -Truck (52,000) (62,800) Equipment 1,537,500 1,241,000 Accum.Depreciation - Equip (580,000) (476,000) Intangibles 40,000 90,000 Accumulated Amortization (12,000) (17,000) Land 600,000 511,000 Totals 2,335,500 3,107,500 Liabilities and Shareholders’ Equity: Accounts Payable 200,000 187,000 Accrued Expenses Payable 60,000 79,000 Dividends Payable 45,000 39,000 Short Term Notes Payable 30,000 22,500 Income Tax Payable 72,500 85,000 Unearned Revenue 87,000 43,000 Bonds Payable Long Term 450,000 750,000 Common Stock 57,000 120,000 APIC - Common Stock 293,000 390,000 Preferred Stock 30,000 35,000 APIC - Preferred Stock 100,000 130,000 Retained Earnings 911,000 1,227,000 Totals 2,335,500 3,107,500 Additional Information that happened in 2016: A. Pumpkins had a net income of $450,000. The company only uses cash dividends. B. Pumpkins bought $19,000 worth of investments and sold other investments for a gain of $5,000. C. Pumpkins purchased a truck for $47,500 by paying $30,000 and financing the rest with a short term notes payable. Pumpkins recorded depreciation expense on trucks for $20,650 and sold a truck for a loss of $4,650. D. Pumpkins sold Equipment with an original historical cost of $706,500 and accumulated depreciation of $281,000 for a gain of $95,000. E. When new equipment is purchased, Pumpkins pays for 20% with cash and finances the remaining 80% by issuing a long term bond payable. F. Pumpkins amortization expense was $9,000. Pumpkins sold a patent this year for $23,300 cash Pumpkin had originally bought the patent for $20,000. Pumpkins purchased a different patent and paid for it using 40% cash and issuing 10% worth of Common Stock and 50% in Additional Paid in Capital –Common Stock. G. Sold land for a $201,500 cash, which generated a loss of $43,500. Pumpkins pays for land purchases with cash. H. Pumpkins settled $200,000 of its bond payable with cash. Prepare a statement of cash flows using the indirect method.

Explanation / Answer

Ans:

Pumpkins Inc Statement of Cash Flows For period ending 12/31/2016 Particulars Amount Amount Cash flow from operating activity Net income $450,000 Depr. Exp - Truck $20,650 Depr. Exp - Equip $177,000 Amort. Exp - Intang $9,000 L/G on Sale - Investments -$5,000 L/G on Sale - Truck $4,650 L/G on Sale - Equip -$95,000 L/G on Sale - Intang -$7,300 L/G on Sale - Land $43,500 Cash $0 AR $10,000 Prepaid Insurance $3,000 Inventory -$25,000 Accounts Pay -$13,000 Accrued Exp Pay $19,000 Dividends Pay $0 Short Term Notes Pay $0 Income Tax Pay $12,500 Unearned Rev -$44,000 $110,000 $560,000 Cash flow from investing activity Sold Investments $32,000 Sold Truck $18,500 Sold Equipment $520,500 Sold Intangibles $23,300 Sold Land $201,500 Bought Investments -$19,000 Bought Truck -$30,000 Bought Equipment -$82,000 Bought Intangible -$28,000 Bought Land -$156,000 Net Cash Provided by Investing Activities $480,800 Cash flow from financing activity Paid Short Term Notes Pay -$25,000 Paid LT Bonds Pay -$200,000 Issued LT Bonds Pay $172,000 Paid Dividends -$140,000 Issued Common Stock $118,000 Issued Preferred Stock $35,000 Net Cash Used By Financing Activities -$40,000 Change in Cash 2016 $1,000,800 Beginning Cash $357,000 Ending Cash $1,357,800

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