I am having trouble with doing cash flow statements Damocles Company manufacture
ID: 2433342 • Letter: I
Question
I am having trouble with doing cash flow statements Damocles Company manufacture fine swords. Below arelisted the net changes in the company's balance sheetaccounts for the past year: Debits Credits Cash $51,000 Accounts Receivable 170,000 Inventory $63,000 Prepaid Expenses 4,000 Long-Term Loans to Subsidiaries 80,000 Long-Term Invesments 90,000 Plant and Equipment 340,000 Accumulated Depreciation 65,000 Accounts Payable 48,000 Accrued Liablilites 5,000 Bonds Payable 200,000 Deferred Income Taxes 9,000 Preferred Stock 180,000 Common Stock 300,000 Retained Earnings 75,000 840,000 840,000 The following addtional information is available about lastyear's activities: a. Net income for the year was $85,000 b. The company sold equipment during the year for$35,000. The equipment originally cost the company $160,000,and it had $145,000 in accumulated depreciation at the time ofsale. c. The company declared and paid $10,000 in cash dividendsduring the year. d. Depreciation charges for the year were $_?_ e. The opening and closing balances in the Plant and Equipmentand Accumulated Depreciation accounts are given below: Opening Closing Plant and Equipment $2,850,000 $3,190,000 Accumulated Depreciation $975,000 $1,040,000 f. There were no stock conversions (i.e., one class of stockconverted to another class) during the year. g. The balance in the Cash account at the beginning of theyear was $190,000; the balance at the end of the year was$_?_ h If data are not given explaining the change in an account,make the most reasonable assumption as to the cause of thechange. Required: Using the indirect method, prepare a statement ofcash flows for the year. I am having trouble with doing cash flow statements Damocles Company manufacture fine swords. Below arelisted the net changes in the company's balance sheetaccounts for the past year: Debits Credits Cash $51,000 Accounts Receivable 170,000 Inventory $63,000 Prepaid Expenses 4,000 Long-Term Loans to Subsidiaries 80,000 Long-Term Invesments 90,000 Plant and Equipment 340,000 Accumulated Depreciation 65,000 Accounts Payable 48,000 Accrued Liablilites 5,000 Bonds Payable 200,000 Deferred Income Taxes 9,000 Preferred Stock 180,000 Common Stock 300,000 Retained Earnings 75,000 840,000 840,000 The following addtional information is available about lastyear's activities: a. Net income for the year was $85,000 b. The company sold equipment during the year for$35,000. The equipment originally cost the company $160,000,and it had $145,000 in accumulated depreciation at the time ofsale. c. The company declared and paid $10,000 in cash dividendsduring the year. d. Depreciation charges for the year were $_?_ e. The opening and closing balances in the Plant and Equipmentand Accumulated Depreciation accounts are given below: Opening Closing Plant and Equipment $2,850,000 $3,190,000 Accumulated Depreciation $975,000 $1,040,000 f. There were no stock conversions (i.e., one class of stockconverted to another class) during the year. g. The balance in the Cash account at the beginning of theyear was $190,000; the balance at the end of the year was$_?_ h If data are not given explaining the change in an account,make the most reasonable assumption as to the cause of thechange. Required: Using the indirect method, prepare a statement ofcash flows for the year. Debits Credits Cash $51,000 Accounts Receivable 170,000 Inventory $63,000 Prepaid Expenses 4,000 Long-Term Loans to Subsidiaries 80,000 Long-Term Invesments 90,000 Plant and Equipment 340,000 Accumulated Depreciation 65,000 Accounts Payable 48,000 Accrued Liablilites 5,000 Bonds Payable 200,000 Deferred Income Taxes 9,000 Preferred Stock 180,000 Common Stock 300,000 Retained Earnings 75,000 840,000 840,000Explanation / Answer
Cash flowsfrom operating activities Net Income 85,000 Adjustments to reconcilenet income to net cash provided by operatingactivities Depreciation 65,000 Gain on disposal of plant &machinery -20,000 Increase in Accounts Receivables -170,000 Decrease in inventory 63,000 Increase in prepaid expense -4,000 Increase in Accounts payable 48,000 Decrease in accrued liabilities -5,000 Deferred Income Taxes 9,000 -14,000 85,000 Net Cash provided by operatingactivities 71,000 Cash flows from investingactivities Purchase of Plant & Machinery -340,000 Long term loans to subsidiary -80,000 -420,000 71,000 Net cash used by investingactivities -349,000 Cash flows from financingactivities Bonds Payable 200,000 Long term investments (see note) 90,000 Redemption of Preferred Stock -180,000 Common Stock 300,000 Payment of dividends -10,000 400,000 -349,000 Net Increase in Cash flow 51,000 Cash at beginning of period 190,000 Cash at end of period 241,000 Note : Long term investments has beenassumed as decrease in libility i.e. fund invested byoutsiders
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