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.

  

The statement of shareholders' equity reveals reductions of $190,000 and $405,000 for stock dividends and cash dividends, respectively.

Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2016. Present cash flows from operating activities by the direct method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)

METAGROBOLIZE INDUSTRIES
Comparative Balance Sheets
December 31, 2016 and 2015
($ in 000s) 2016 2015   Assets   Cash $ 480 $ 190   Accounts receivable 510 270     Inventory 660 390     Land 700 605     Building 800 800      Less: Accumulated depreciation (300) (275)   Equipment 2,900 2,630      Less: Accumulated depreciation (493) (460)   Patent 1,800 2,100 $ 7,057 $ 6,250     Liabilities   Accounts payable $ 760 $ 560   Accrued expenses payable 230 210   Lease liability—land 150 0   Shareholders' Equity   Common stock 2,620 2,500     Paid-in capital—excess of par 600 530     Retained earnings 2,697 2,450   $ 7,057 $ 6,250

Explanation / Answer

Metagrobolize Industries

Cash Flow Statement ( Direct) for the year ended December 31, 2016:

Workings:

Inventory

Accounts Payable

$ $ Cash flows from operating activities Receipts from customers 2,821 Payments for goods (1,030) Payments for services (580) Net cash flows from operating activities 1,211 Cash flows from investing activities Sale proceeds of equipment 19 Purchase of equipment (660) Sale proceeds of land 125 Net cash used in investing activities (516) Cash flows from financing activities Cash dividends paid (405) Net cash used in financing activities (405) Net increase in cash 290 Cash, December 31, 2015 190 Cash, December 31, 2016 480

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