Sharp Company Comparative Balance Sheet Additional Data: Net income for the year

Question

Sharp Company

Comparative Balance Sheet

Additional Data:

Net income for the year amounted to $134,000.

Cash dividends were paid amounting to 6% of par value.

Land was sold for $130,000.

Sharp sold equipment, which cost $225,000 and had accumulated depreciation of $90,000, for $115,000.

Instructions

Prepare a statement of cash flows using the indirect method.

December 31 December 31 2018 2017 Cash $     59,000 $     36,000 Accounts recievable, net 53,000 57,000 Inventory 156,000 123,000 Land 180,000 285,000 Buildings 300,000 300,000 Accumulated depreciation - building (75,000) (60,000) Equipment 1,565,000 900,000 Accumulated depreciation—equipment (177,000)    (141,000) $2,061,000 $1,500,000 Accounts payable $   202,000 $ 150,000 Bonds payable 450,000 -0- Capital stock, $10 par 1,250,000 1,250,000 Retained earnings      159,000      100,000 $2,061,000 $1,500,000

Explanation / Answer

Prepare staatement of cash flow :

Cash flow from operating activities Net income 134000 Adjustment to reconcile net income Depeciation 141000 Loss on sale of equipment 20000 Gain on sale of land -25000 Decrease account receivable 4000 Increase inventory -33000 Increase account payable 52000 159000 Net cash flow from operating activities 293000 Cash flow from investing activities Sale of equipment 115000 Sale of land 130000 Purchase of equipment -890000 Net cash flow from investing activities -645000 Cash flow from financing activities Issue bonds payable 450000 Dividend paid -75000 Net cash flow from financing activities 375000 Net cash flow 23000 Beginning cash 36000 Ending cash 59000

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