Required: Financial Statements of ABC Company, a merchandising business at 12/31
ID: 2523008 • Letter: R
Question
Required: Financial Statements of ABC Company, a merchandising business at 12/31/16: Cash Balance 01/02/16 $129,555 Cash Balance 12/31/16 529,455 Net Income 399,50 (22,600) (18,500) 7,200 9,100 Book Loss on sale of M&E; (1) ecrease in Merchandise Inventory ncrease in Accounts Receivable Ancrease in Accounts Payable Decrease in Unearned Revenue (62,000) Depreciation Expense- Office Equipment (16.000 Sold Common Stock 10,000 Shares at $15; PV 1.00, 150,000 Redeemed "Series A", 20 Year Long Term Bonds (100,000) Jssued Common Stock in exchange for 75,000 32,000 85,000 ? Plant Assets Paid Cash Dividends Purchased Factory Equipment (1) Sale of Machinery & Equipment (M&E;): ck Cash Received Cost 125,000 a Accumulated Depr. 32,000 Required: 1) Using proper form, prepare a Statement of Cash Flows for the ABC Company at 12/31/16. 2) Reconcile the Increase or decrease in Cash Flows to the ending cash balance.Explanation / Answer
CASH FLOW STATEMENT INDIRECT METHOD
Cash Flow form Operating Activities:
Net Income 3,99,500
+Depreciation on Office eqipment(Non Cash Exp) 16,000
+Loss on Sale of M&E 22,600
Cash Flow before Working Capital Changes 438100
- Increase in Accounts Receivable (7200)
+Increase in Accounts Payable 9100
+Decrease in Trade Merchandise 18,500
-Decrease in Unearned Revenue(Current Liability) (62,000)
Net Cashflow from Operating Activities 3,96,500
Cashflow From Investing Activities:
+ Sale of Machinery 70,400
- Purchase of Factory Equipment (85,000)
Net Cashflow from Investing Activities (14,600)
Cashflow From Financing Activities:
+ Issue of Common Stock 1,50,000
-Redemption of Longterm bonds (1,00,000)
-Payment of Dividends (32,000)
Net Cashflow from Financing Activities 18,000
Add Cash at the Beginning(01/02/16) 1,29,555
Cash at the End of the year(12/31/16) 5,29,455
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