2.) Scheeler Company has the following comparative balance sheet data available:
ID: 2527424 • Letter: 2
Question
2.) Scheeler Company has the following comparative balance sheet data available:
12/31/2018
12/31/2017
Cash
$30,000
$80,000
Accounts Receivable, net
160,000
100,000
Inventory
100,000
70,000
Prepaid Rent
20,000
10,000
Total Current Assets
$310,000
$260,000
Equipment
$400,000
$200,000
Accumulated Depreciation
(60,000)
(50,000)
Total Assets
$650,000
$410,000
Accounts Payable
$50,000
$40,000
Salaries Payable
40,000
40,000
Bonds Payable
0
50,000
Common Stock, $10 par
300,000
100,000
Additional Paid-in Capital
50,000
0
Retained Earnings
210,000
180,000
Total Liabilities & Stockholders' Equity
$650,000
$410,000
Additional information:
1. The company reports net income of $100,000 and depreciation expense of $20,000 for the year ending December 31, 2018.
2. Dividends declared and paid in 2018, $70,000.
3. Equipment with a cost of $20,000 and accumulated depreciation of $10,000 was sold for $3,000.
4. New equipment was purchased for cash.
5. No common stock was retired during 2018.
Using the indirect method, prepare the statement of cash flows for the year ending December 31, 2018
12/31/2018
12/31/2017
Cash
$30,000
$80,000
Accounts Receivable, net
160,000
100,000
Inventory
100,000
70,000
Prepaid Rent
20,000
10,000
Total Current Assets
$310,000
$260,000
Equipment
$400,000
$200,000
Accumulated Depreciation
(60,000)
(50,000)
Total Assets
$650,000
$410,000
Accounts Payable
$50,000
$40,000
Salaries Payable
40,000
40,000
Bonds Payable
0
50,000
Common Stock, $10 par
300,000
100,000
Additional Paid-in Capital
50,000
0
Retained Earnings
210,000
180,000
Total Liabilities & Stockholders' Equity
$650,000
$410,000
Explanation / Answer
Statement of Cash Flow Particulars Amount Total Amount Income 100,000.00 Loss on sale of equipment 7,000.00 Depreciation 20,000.00 Increase in AR (60,000.00) Increase in inventory (30,000.00) Increase in prepaid rent (10,000.00) Increase in AP 10,000.00 Change in Salaries payable - Cash flow from operating activities 37,000.00 Cash flow from Investing activities Sale of Equipment 3,000.00 Purchase of Equipment (220,000.00) Cash flow from Investing activities (217,000.00) Cash flow from Financing activities Issue of Stock 200,000.00 Issue of paid in capital 50,000.00 Payment of bonds (50,000.00) Dividends Paid (70,000.00) Cash flow from Financing activities 130,000.00 net change in cash and cash equivalents (50,000.00) Opening cash and cash equivalents 80,000.00 Closing cash and cash equivalents 30,000.00
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