The following informations is available for the preparation of Sharp company\'s
ID: 2485983 • Letter: T
Question
The following informations is available for the preparation of Sharp company's statement of cash flow:
Comparaative balance sheet:- December 31
2015
2014
Cash
54000
36000
Accounts receivables, net
53000
57000
Inventory
161000
123000
Land
180000
285000
Building
300000
300000
Accum.Dep.- building
(75000)
(60000)
Equipment
1,565,000
900,000
Accum. Dep. – Equipment
(177000)
(141000)
Total Assets
2,061,000
1,500,000
Accounts Payable
202000
150000
Bonds payable
450000
0
Capital stock, $10 par
1,250,000
1,250,000
Retained earnings
159000
100000
2,061,000
1,500,000
Additional data:-
1. Net income for the year amounted to $109,000
2. cash dividends were paid amounting to 4% of par value
3. Land was sold for $120,000
4. Sharp sold equipment, which cost $225,000 and had accumulated depreciation of $90,000 for $115,000
Required:- Prepare a statement of cash flows using the indirect method.
2015
2014
Cash
54000
36000
Accounts receivables, net
53000
57000
Inventory
161000
123000
Land
180000
285000
Building
300000
300000
Accum.Dep.- building
(75000)
(60000)
Equipment
1,565,000
900,000
Accum. Dep. – Equipment
(177000)
(141000)
Total Assets
2,061,000
1,500,000
Explanation / Answer
Note: It is not possible to do direct method since more information is required to show cash from operations.
Net Income 109000 Gain on sale of land -4000 (285000-180000)-109000 Loss on sale of equipment 20000 (250000-90000)-115000 Depreciation on building 15000 Depreciation on Equipment 126000 (141000-90000)-177000 Cash from Operations 266000 Accounts Receivable 4000 Inventory -38000 Accounts Payable 52000 Working Capital Changes 18000 A Cash flow from Operating Activities 284000 Land Sales 109000 Equipment Sale 115000 Equipment purchase -890000 (900000-225000)-1565000 B Cash flow from Investments -666000 Bonds Payable 450000 Dividend paid -50000 1250000*4% C Cash from financing 400000 A+B+C Total cash generated 18000 Opening cash 36000 Closing Cash 54000Related Questions
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