Taylor Company\'s comparative balance sheets for December 31 of 2017 and 2016 ar

Question

Taylor Company's comparative balance sheets for December 31 of 2017 and 2016 are shown below Assets Dec 31, 2017Dec 31, 2016 IncreaseDecrease $73,700 23,000 $50,700 Cash Accounts Receivable (net) Inventory Prepaid Expenses Plant Assets Accumulated Depreciation 11,500 33,600 12,500 90,000 12,300 800 31,5002,100 8,700 3,800 76,000 14,000 24,100)18,400)5,700 Total Assets $197,200 133,100 Liabilities and Stockholders' Equity $18,600 13,900 4,700 Accounts Pavable Wages Payable Income Tax Payable Bonds Payable Common Stock, $10 par Additional Paid-in Capital Retained Earnings Treasury Stock 3,200 200 7,700 49,000 65,000 40,000 22,000 (5,300) 3,400 5,8001,900 49,000 55,00010,000 25,00015,000 30,000 8,000 5,300 Total Liabilities and Stockholders' Equity $197,200 133,100 The following information is taken from Taylor's financial records .During 2017, equipment was sold for $17,900. The equipment had an original cost of $32,000 and a current book value of $23,000 1,000 shares of common stock were issued for $25 per share . Depreciation expense for 2017 was $14,700 . Net income for the year was $5,000 Required Prepare the operating activities section of the statement of cash flows for Taylor Company, indirect method. Assume that all accounts payable relate to purchases of inventory Note: The financing activities and investing activities sections have been completed

Explanation / Answer

Solution:

Taylor Company Statement of Cash Flows (Indirect Method) For year ended December 31, 2017 Particulars Details Amount Cash Flow from Operating Activities: Net Income $5,000.00 Add: Depreciation Expense $14,700.00 Loss on sale of equipment $5,100.00 Decrease in accounts receivables $800.00 Increase in Accounts Payable $4,700.00 Increase in income tax payble $1,900.00 $27,200.00 Deduct: Increase in inventory $2,100.00 Increase in prepaid expenses $3,800.00 Decrease in wages payable $3,200.00 $9,100.00 Net Cash provided by operating activities $23,100.00 Cash Flow from Investing Activities: Cash received from: sale of equipment $17,900.00 $17,900.00 Cash paid out for: Purchase of Equipment $46,000.00 $46,000.00 Net Cash Provided by Investing activities -$28,100.00 Cash Flow from Financing Activities: Cash received from: Issuance of bond $49,000.00 Issuance of stock $25,000.00 $74,000.00 Cash paid out for: Dividends $13,000.00 Treasury Stock $5,300.00 $18,300.00 Net Cash Provided by financing activities $55,700.00 Net Increase / (Decrease) in Cash $50,700.00 Cash balance at beginning of year $23,000.00 Cash balance at end of year $73,700.00

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