Problem D13-23 Crane Control Statement of Cash Flows For the Year Ended December

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Problem D13-23

Crane Control
Statement of Cash Flows
For the Year Ended December 31, 2016

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Problem D13-23

Kate Petusky prepared Crane Controls’ balance sheet and income statement for 2016. Before she could complete the statement of cash flows, she had to leave town to attend to a family emergency. Because the full set of statements must be provided to the auditors today, Crane’s president, Lance Meyers, has asked you to prepare the statement of cash flows. Meyers has provided you with the balance sheets and income statement that Petusky prepared, as well as some notes she made:
Crane Controls
Income Statement
For the Year Ended December 31, 2016 Sales revenue $ 129,600 Cost of goods sold 70,510   Gross margin 59,090 Selling expense $13,010 Administrative expense 8,120 Salaries expense 20,240 Depreciation expense 1,990 Interest expense 4,390 47,750 Income before gain and taxes 11,340 Gain on sale of Land 950 Income tax expense 805   Net income $ 11,485 Crane Controls
Comparative Balance Sheets
As of December 31 2016 2015 Cash $ 5,210 $ 4,200 Accounts receivable, net 6,330 5,500 Inventory 31,830 34,350   Total current assets 43,370 44,050 Property, plant, & equipment, net 211,990 215,420   Total Assets $ 255,360 $ 259,470 Accounts payable $ 3,420 $ 5,920 Accrued expenses 2,560 2,440 Taxes payable 2,240 2,730 Bonds payable 60,030 50,460   Total liabilities 68,250 61,550 Common stock 125,440 125,440 Retained earnings 61,670 72,480   Total stockholders’ equity 187,110 197,920 Total liabilities & stockholders’ equity $ 255,360 $ 259,470 • Equipment with an original cost of $35,160 was sold for $20,030. The book value of the equipment was $19,080. • On June 1, 2013, the company purchased new equipment for cash at a cost of $17,640. • At the end of the year the company issued bonds payable for $9,570 cash. The bonds will mature on December 31, 2017. • The company paid $22,295 in cash dividends for the year.
Using the indirect method, prepare Crane Controls' statement of cash flows for 2016. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Crane Control
Statement of Cash Flows
For the Year Ended December 31, 2016

Cash flows from investing activitiesCash flows from financing activitiesCash flows from operating activitiesAdjustments to net incomeCash, ending balanceChange in cashCash, beginning balance

Decrease in accounts payableDecrease in accrued expensesIncrease in accrued expensesIncrease in accounts payableDecrease in income taxes payableGain on sale of landSale of equipmentIncrease in income taxes payablePurchase of equipmentIssue bondsCash dividends on common stockDecrease in accounts receivableNet income / (loss)DepreciationDecrease in inventoriesIncrease in accounts receivableIncrease in inventories

$

Adjustments to net incomeCash flows from investing activitiesCash flows from financing activitiesCash, ending balanceCash, beginning balanceCash flows from operating activitiesChange in cash

    Decrease in accounts payable    Net income / (loss)    Gain on sale of land    Issue bonds    Decrease in inventories    Increase in accounts receivable    Increase in accrued expenses    Increase in income taxes payable    Increase in inventories    Increase in accounts payable    Depreciation    Decrease in accrued expenses    Decrease in income taxes payable    Sale of equipment    Purchase of equipment    Cash dividends on common stock    Decrease in accounts receivable    

$

    Increase in income taxes payable    Increase in accounts payable    Increase in inventories    Decrease in accounts receivable    Sale of equipment    Issue bonds    Purchase of equipment    Increase in accrued expenses    Cash dividends on common stock    Depreciation    Decrease in income taxes payable    Net income / (loss)    Gain on sale of land    Increase in accounts receivable    Decrease in inventories    Decrease in accounts payable    Decrease in accrued expenses    

    Purchase of equipment    Increase in accrued expenses    Depreciation    Increase in accounts receivable    Increase in accounts payable    Decrease in accrued expenses    Decrease in inventories    Increase in inventories    Decrease in income taxes payable    Sale of equipment    Net income / (loss)    Decrease in accounts payable    Issue bonds    Increase in income taxes payable    Cash dividends on common stock    Decrease in accounts receivable    Gain on sale of land    

    Increase in inventories    Increase in income taxes payable    Increase in accounts payable    Cash dividends on common stock    Depreciation    Net income / (loss)    Gain on sale of land    Decrease in accounts receivable    Decrease in income taxes payable    Decrease in inventories    Sale of equipment    Purchase of equipment    Decrease in accrued expenses    Increase in accounts receivable    Decrease in accounts payable    Issue bonds    Increase in accrued expenses    

    Net income / (loss)    Cash dividends on common stock    Sale of equipment    Increase in accrued expenses    Purchase of equipment    Issue bonds    Depreciation    Gain on sale of land    Decrease in inventories    Increase in accounts receivable    Decrease in accounts receivable    Decrease in accrued expenses    Decrease in income taxes payable    Increase in inventories    Increase in accounts payable    Decrease in accounts payable    Increase in income taxes payable    

    Increase in inventories    Depreciation    Decrease in accounts receivable    Purchase of equipment    Cash dividends on common stock    Decrease in income taxes payable    Net income / (loss)    Sale of equipment    Increase in income taxes payable    Gain on sale of land    Increase in accounts receivable    Decrease in inventories    Issue bonds    Decrease in accounts payable    Increase in accounts payable    Increase in accrued expenses    Decrease in accrued expenses    

    Cash dividends on common stock    Purchase of equipment    Decrease in accounts receivable    Increase in income taxes payable    Decrease in inventories    Increase in accounts payable    Depreciation    Net income / (loss)    Issue bonds    Sale of equipment    Increase in accrued expenses    Decrease in accrued expenses    Decrease in income taxes payable    Increase in inventories    Gain on sale of land    Increase in accounts receivable    Decrease in accounts payable    

  Net cash

providedused

by

financingoperatinginvesting

activities

Adjustments to net incomeCash flows from investing activitiesChange in cashCash flows from financing activitiesCash, beginning balanceCash, ending balanceCash flows from operating activities

    Increase in accrued expenses    Increase in income taxes payable    Increase in accounts receivable    Issue bonds    Decrease in accrued expenses    Increase in inventories    Decrease in accounts receivable    Decrease in accounts payable    Increase in accounts payable    Decrease in income taxes payable    Sale of equipment    Decrease in inventories    Purchase of equipment    Cash dividends on common stock    Net income / (loss)    Depreciation    Gain on sale of land    

    Decrease in accounts payable    Sale of equipment    Gain on sale of land    Depreciation    Increase in accounts receivable    Decrease in accrued expenses    Increase in income taxes payable    Decrease in accounts receivable    Decrease in inventories    Issue bonds    Increase in inventories    Increase in accounts payable    Cash dividends on common stock    Increase in accrued expenses    Net income / (loss)    Decrease in income taxes payable    Purchase of equipment    

  Net cash

providedused

by

investingfinancingoperating

activities

Adjustments to net incomeChange in cashCash flows from investing activitiesCash, ending balanceCash flows from financing activitiesCash, beginning balanceCash flows from operating activities

    Cash dividends on common stock    Depreciation    Decrease in inventories    Net income / (loss)    Gain on sale of land    Increase in accounts receivable    Issue bonds    Purchase of equipment    Decrease in accounts payable    Increase in accounts payable    Increase in accrued expenses    Decrease in accounts receivable    Increase in inventories    Decrease in accrued expenses    Decrease in income taxes payable    Increase in income taxes payable    Sale of equipment    

    Decrease in inventories    Increase in accounts payable    Decrease in accounts payable    Increase in accrued expenses    Cash dividends on common stock    Increase in accounts receivable    Increase in inventories    Decrease in accounts receivable    Purchase of equipment    Gain on sale of land    Decrease in income taxes payable    Decrease in accrued expenses    Increase in income taxes payable    Sale of equipment    Issue bonds    Net income / (loss)    Depreciation    

  Net cash

usedprovided

by

investingfinancingoperating

activities

Cash, ending balanceCash flows from investing activitiesAdjustments to net incomeCash, beginning balanceCash flows from financing activitiesChange in cashCash flows from operating activities

Adjustments to net incomeCash flows from financing activitiesChange in cashCash, ending balanceCash flows from operating activitiesCash, beginning balanceCash flows from investing activities

Cash, beginning balanceCash, ending balanceAdjustments to net incomeCash flows from operating activitiesChange in cashCash flows from financing activitiesCash flows from investing activities

$

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Explanation / Answer

Cash Flow from Operating Incomes

    Net Income

11485

    Adjustments for:

        Depreciation Expenses

1990

        Interest Expenses

4390

       Gain on Sale of Land

-950

       Income Tax expenses

850

       Increase in accounts receivable

-830

       Decrease in Inventory

2520

       Decrease in Accounts payable

-2500

       Increase in Accrued expenses

120

      Decrease in Taxes payables

-490

      Cash generated from operation

16585

        Interest paid

-4390

        Income tax

-850

Net Cash from Operating Activities

11345

Cash Flow from Investing Activities

      Proceed from sale of equipment

20030

     Purchase of new equipment

-17640

Net cash flow from investing activities

2390

Cash Flow from Financing activities

    Dividend Paid

-22295

    Proceed from issue of bonds

9570

Net Cash used in financing activities

-12725

Net Increase in cash and cash equivalent

1010

cash and cash equivalent at the beginning of year

4200

cash and cash equivalent at the end of year

5210

Note: Interest paid is considered as operating activity whereas dividend paid as investiong activity.

Cash Flow from Operating Incomes

    Net Income

11485

    Adjustments for:

        Depreciation Expenses

1990

        Interest Expenses

4390

       Gain on Sale of Land

-950

       Income Tax expenses

850

       Increase in accounts receivable

-830

       Decrease in Inventory

2520

       Decrease in Accounts payable

-2500

       Increase in Accrued expenses

120

      Decrease in Taxes payables

-490

      Cash generated from operation

16585

        Interest paid

-4390

        Income tax

-850

Net Cash from Operating Activities

11345

Cash Flow from Investing Activities

      Proceed from sale of equipment

20030

     Purchase of new equipment

-17640

Net cash flow from investing activities

2390

Cash Flow from Financing activities

    Dividend Paid

-22295

    Proceed from issue of bonds

9570

Net Cash used in financing activities

-12725

Net Increase in cash and cash equivalent

1010

cash and cash equivalent at the beginning of year

4200

cash and cash equivalent at the end of year

5210

Note: Interest paid is considered as operating activity whereas dividend paid as investiong activity.

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