Below are the balance sheets and income statement for Kinder Care Company. Pleas
ID: 2465220 • Letter: B
Question
Below are the balance sheets and income statement for Kinder Care Company. Please prepare the statement of cash flows for 2015 on both the indirect and direct bases.
Kinder Care Company
Balance Sheet
December 31
2015
2014
Cash
135,900
111,200
Accounts receivable (net)
38,300
20,300
Inventory
35,000
26,000
Long-term investments
-
20,000
Property, plant & equipment
216,500
150,000
Accumulated depreciation
(57,700)
(25,000)
368,000
302,500
Accounts payable
17,000
35,500
Accrued liabilities
21,000
27,000
Long-term notes payable
70,000
50,000
Common stock
185,000
145,000
Retained earnings
75,000
45,000
368,000
302,500
Sales Revenue………………………………………………..
$ 512,000
Cost of goods sold…………………………………………
291,000
Gross margin …………………..
221,000
Operating expenses…………………………………………
91,500
Pre-tax operating income
129,500
Gain on sale of investments
15,000
Pre-tax income
144,500
Tax
42,000
Net income………………………………………………………
$ 102,500
Additional data:
1
Depreciation on plant assets for the year, $32,700.
2
Sold the long-term investments for $35,000.
3
Purchased machinery costing $66,500, issued note for $20,000 and paid remainder in cash.
4
Paid a $40,000 long-term note payable by issuing common stock.
5
Issued additional long-term notes payable during the year.
Kinder Care Company
Balance Sheet
December 31
2015
2014
Cash
135,900
111,200
Accounts receivable (net)
38,300
20,300
Inventory
35,000
26,000
Long-term investments
-
20,000
Property, plant & equipment
216,500
150,000
Accumulated depreciation
(57,700)
(25,000)
368,000
302,500
Accounts payable
17,000
35,500
Accrued liabilities
21,000
27,000
Long-term notes payable
70,000
50,000
Common stock
185,000
145,000
Retained earnings
75,000
45,000
368,000
302,500
Explanation / Answer
cash flows statement using indirect method:
Details Amount Amount Cash flows from operating activities: Net profit $ 102,500.00 Adjustments for: Depreciation - Plant & assets $ 32,700.00 Gain on sale of investments $ (15,000.00) Increase in Accounts receivable $ (18,000.00) Increase in Inventory $ (9,000.00) Decrease in accounts payable $ (18,500.00) Decrease in accrued liabilities $ (6,000.00) Net cash flows from operating activities $ 68,700.00 Cash flows from investing activities: Proceeds from sale of long term investments $ 35,000.00 Paid for purchased machinery $ (46,500.00) Paid for long term notes payable $ (40,000.00) net Cash flows used in financing activities $ (51,500.00) Cash flows from financing activities: proceeds from issue of common stock $ 40,000.00 proceeds from issue of long term notes payable($70,000-($50000-$40,000) $ 60,000.00 Net Cash flows from financing activities $ 100,000.00 Net increase / Decrease in cash $ 24,700.00 Add: Opening balance of cash $ 111,200.00 Closing balance of cash $ 135,900.00
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