Chapter 21-Homework G 2 Problem 21-5 Statement of cash flows; direct method [LO2

Question

Chapter 21-Homework G 2 Problem 21-5 Statement of cash flows; direct method [LO21-3, 21-8] Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are g?en below for Metaarobolize industries Additional Information from the accounting records of Metagrobolize also is provided 3 points METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2018 and 2017 (s in eees) 2018 2017 Assets Cash Accounts receivable Inventory 600 900 675 900 $ 580 375 450 525 600 900 Building Less: Accumulated depreciation (300) (270) Equipment 2,850 2,25e Less: Accumulated depreciation (525) (4) Patent 1,2ee 1,58e $ 6,88e $5,85e Liabilities Accounts payable Accrued expenses payable Lease liability-land Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings $750458 225 3ee 130 3,15e 3,ee 675 1,50e $ 6,88e $5,85e 1,8ee METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2018 (s in eees) Revenues Sales revenue Gain on sale of land $2,645 90 $2,735 Expenses s 600 30 315 Cost of goods sold Depreciation expense-building Depreciation expense-equipment Loss on sale of equipment Amortization of patent Operating expenses 300 $ 5ee 1,76e $ 975 Net income Additional Information from the accounting records: a. Annual payments of $20,000 on the finance lease liablity are pald each January 1, beginning In 2018 b. During 2018, equipment with a cost of$300,000 (90% depreciated) was sold c. The statement of shareholders' equity reveals reductions of $225,000 and $450,000 for stock dividends and cash dividends, respectively

Explanation / Answer

Direct method Statement of cash flow Cash flows from operating activities Cash inflows From customers $2645-(600-450) 2495 Cash outflow Payment to suppliers 600+(900-525)-(750-450) -675 Payment of operating expenses 500-(300-225) -425 1395 Net cash from operating activities       1,395.00 Cash flows from investing activities Sale Of equipment (300*10%)-15 15 Sale of land (75+90) 165 Purchase f Equipment 2850-(2250-300) -900 -720 Net cash used investing activities       (720.00) Cash flows from financing activities Lease payment -20 Payment of Dividend -450         (470.00) Net cash from financing activities       (470.00) Net Increase in cash and cash equivalents        205.00 Cash and cash equivalents at beginning of period        375.00 Ending Balance             580.00 Noncash Investing & financing activities Declration of Stock dividend 225 Purcahse of land on lease

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