Comparative balance sheets for 2016 and 2015 and a statement of income for 2016

Question

Comparative balance sheets for 2016 and 2015 and a statement of income for 2016 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided. METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2016 and 2015 ($ in 000s) 2016 2015 Assets Cash $ 600 $ 375 Accounts receivable 600 450 Inventory 900 525 Land 675 600 Building 900 900 Less: Accumulated depreciation (300) (270) Equipment 2,850 2,250 Less: Accumulated depreciation (525) (480) Patent 1,200 1,500 $ 6,900 $ 5,850 Liabilities Accounts payable $ 750 $ 450 Accrued expenses payable 300 225 Lease liability—land 150 0 Shareholders' Equity Common stock 3,150 3,000 Paid-in capital—excess of par 750 675 Retained earnings 1,800 1,500 $ 6,900 $ 5,850. The pairs of numbers represent 2016 and 2015. The first number represents 2016 and the second number represents 2015 of the accounts. METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2016 ($ in 000s) Revenues Sales revenue $ 2,645 Gain on sale of land 90 $ 2,735 Expenses Cost of goods sold $ 600 Depreciation expense—building 30 Depreciation expense—equipment 315 Loss on sale of equipment 15 Amortization of patent 300 Operating expenses $ 500 1,760 Net income $ 975 Additional information from the accounting records: a. During 2016, equipment with a cost of $300,000 (90% depreciated) was sold. b. The statement of shareholders’ equity reveals reductions of $225,000 and $450,000 for stock dividends and cash dividends, respectively. Required: Prepare the statement of cash flows for Metagrobolize Industries using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. (i.e., 10,000 should be entered as 10).)

Explanation / Answer

($ in 000s) METAGROBOLIZE INDUSTRIES Statement of Cash Flows For the year ending December 31, 2016 Cash Flow from opearating activities: Net Income                  975 Add/(Less) non cash effects on operating activities Depreciation expenses Building                    30 Equipment                  315 Loss on sale of Equipment                    15 Gain on Sale of Land                  (90) Amortization of Patent                  300 Increase in Accounts Receivables                (150) Increase in Inventory                (375) Increase in Accounts Payables                  300 Increase in Accrued Exp.                    75                  420 Net Cash provided by operating activities              1,395 Cash flow from investing activities Sale of Equipment                    15 Purchase of equipment                (900) Sale of land                  165 Net Cash provided by investing activities                (720) Cash flow from Financing activities Proceeds from issue of Stocks Dividends Paid - Common Stock                (450) Net Cash provided by Financing activities                (450) Net Increase in Cash                  225 Cash Balance at Jan. 1, 2016                  375 Cash Balance at Dec 31, 2016                  600 Equipment A/c To Balance B/f          2,250 By Accumulated Dep             270 To Cash (Bal. Fig.)             900 By Loss on Sale of Equipment                15 By Cash                15 By Balance C/f          2,850          3,150          3,150 Accumulated Dep. - Equipment To Equipment A/c             270 By Balance C/f             480 By Depreciation             315 To Balance C/f             525             795             795 Land A/c To Balance B/f             600 By Cash (Balancing Figure)             165 To Gain on sale of Land                90 By Balance C/f             675 To Capita Lease - Land             150             840             840

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