The management team of Wickersham Brothers Inc. is preparing its annual financia

Question

The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized. Current Year Prior Year Balance Sheet Assets Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation $ 62,100 92,000 69,000 128,000 (35,920) $ 83,700 80,500 74,750 69,000 (18,000) Total assets $315,180 $289,950 Liabilities: Accounts payable Salaries and Wages Payable Notes payable, long-term Stockholders' Equity: Common stock Retained earnings $ 11,500 2,300 57,500 $ 13,800 1,150 69,000 112,000 131,880 92.000 114,000 Total liabilities and stockholders' equity $315,180 $289,950 Income Statement Sales Cost of goods sold Depreciation expense Other expenses $260.000 140,000 17,920 65,000 Net income $ 37,080 Other information from the company's records includes the following: a. Bought equipment for cash, $59,000. b. Paid $11,500 on long-term note payable. c. Issued new shares of common stock for $20,000 cash. d. Cash dividends of $19,200 were declared and paid to stockholders. e. Accounts Payable arose from inventory purchases on credit. f. Income tax expense ($9,270) and interest expense ($3,450) were paid in full at the end of both years and are included in Other Expenses.

Explanation / Answer

WICKERSHAM BROTHERS Inc. Statement of Cashflows For the year Ended December 31 Cash flows from operating activities Net Income $   37,080 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense $   17,920 Changes in current assets and current liabilities Decrease in accounts receivable $ (11,500) 80500-92000 Decrease in inventory $      5,750 74750-69000 Decrease in accounts payable $   (2,300) 11500-13800 Increase in salaries and wages payable $      1,150 2300-1150 $   11,020 Net cash flow from operating activities $   48,100 Cash flows from investing activities Cash paid for Purchase of equipment $ (59,000) Net cash used for investing activities $ (59,000) Cash flows from financing activities Cash received from issuance of common stock $   20,000 Cash paid for dividend $ (19,200) Repayment of long term note $ (11,500) Net cash flow used by financing activities $ (10,700) Net increase in cash and cash equivalents $ (21,600) Cash and cash equivalents at beginning of period $   83,700 Cash and cash equivalents at end of period $   62,100 Non cash investing and financing activities Issued long term note for equipment $   46,375

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