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 $ 420 $ 205 Accounts receivable 390 210 Inventory 540 360 Land 550 515 Building 900 900 Less: Accumulated depreciation (300) (270) Equipment 2,600 2,270 Less: Accumulated depreciation (367) (340) Patent 1,200 1,450 $ 5,933 $ 5,300 Liabilities Accounts payable $ 640 $ 390 Accrued expenses payable 170 130 Lease liability—land 150 0 Shareholders' Equity Common stock 3,140 3,000 Paid-in capital—excess of par 750 730 Retained earnings 1,083 1,050 $ 5,933 $ 5,300 METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2016 ($ in 000s) Revenues Sales revenue $ 2,489 Gain on sale of land 40 $ 2,529 Expenses Cost of goods sold $ 840 Depreciation expense—building 30 Depreciation expense—equipment 216 Loss on sale of equipment 15 Amortization of patent 250 Operating expenses $ 550 1,901 Net income $ 628 Additional information from the accounting records:

a. During 2016, equipment with a cost of $210,000 (90% depreciated) was sold.

b. The statement of shareholders’ equity reveals reductions of $160,000 and $435,000 for stock dividends and cash dividends, respectively. Required:

Prepare the statement of cash flows for Metagrobolize Industries using the indirect method. (Enter your answers in thousands. (i.e., 10,000 should be entered as 10).) Amounts to be deducted should be indicated with a minus sign.)

Explanation / Answer

cash flow statemnet cash flow from operating activity net income 628 depriciation 496 gain on sale of land -2529 loss on sale of equipment 15 cash flow before WC change -1390 WC change Account receivable -180 inventory -180 account payable 250 expense payable 40 net cash flow from operating activity -1460

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