Kingbird Company, a major retailer of bicycles and accessories, operates several
ID: 2534745 • Letter: K
Question
Kingbird Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Kingbird as of May 31, 2017, are as follows. The company is preparing its statement of cash flows.
KINGBIRD COMPANY
COMPARATIVE BALANCE SHEET
AS OF MAY 31
2017
2016
$28,100
$20,000
75,000
58,300
220,600
247,900
9,100
7,000
332,800
333,200
601,900
506,700
150,600
124,800
451,300
381,900
$784,100
$715,100
$123,400
$113,800
47,600
71,900
26,900
25,100
197,900
210,800
70,000
100,000
267,900
310,800
370,000
280,000
146,200
124,300
516,200
404,300
$784,100
$715,100
KINGBIRD COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED MAY 31, 2017
$1,253,000
717,300
535,700
252,500
74,600
25,800
8,100
361,000
174,700
43,000
$131,700
The following is additional information concerning Kingbird’s transactions during the year ended May 31, 2017.
Cash dividends of $109,800 were declared and paid at the end of the fiscal year.
Prepare a statement of cash flows for Kingbird Company for the year ended May 31, 2017, using the direct method. (A reconciliation of net income to net cash provided is not required.)
KINGBIRD COMPANY
COMPARATIVE BALANCE SHEET
AS OF MAY 31
2017
2016
Current assets Cash$28,100
$20,000
Accounts receivable75,000
58,300
Inventory220,600
247,900
Prepaid expenses9,100
7,000
Total current assets332,800
333,200
Plant assets Plant assets601,900
506,700
Less: Accumulated depreciation—plant assets150,600
124,800
Net plant assets451,300
381,900
Total assets$784,100
$715,100
Current liabilities Accounts payable$123,400
$113,800
Salaries and wages payable47,600
71,900
Interest payable26,900
25,100
Total current liabilities197,900
210,800
Long-term debt Bonds payable70,000
100,000
Total liabilities267,900
310,800
Stockholders’ equity Common stock, $10 par370,000
280,000
Retained earnings146,200
124,300
Total stockholders’ equity516,200
404,300
Total liabilities and stockholders’ equity$784,100
$715,100
Explanation / Answer
Below is the cashflow as per Direct Method. the workings for each of the figures is given below
Particulars
Amount
Amount
Cashflow from Operating Activities
Cash Receipts from Customers
1236300
Cash paid to suppliers
-680400
Prepaid expenses paid
-10200
Cash paid to Employees
-276800
Taxes paid
-43000
Interest Paid
-72800
Net Cash from Operating Activities
153100
Cashflow from Investing Activities
Purchase of Plant
-25200
Net Cash from Investing Activties
-25200
Cashflow from Financing Activities
Bonds repaid
-30000
Proceeds from Issue of Shares
20000
Dividend Paid
-109800
Net Cash from Financing Activities
-119800
Net increase in cash and cash equivalents
8100
Cash and cash equivalents at beginning of period
20000
Cash and cash equivalents at end of period
28100
Workings:
Opening Balance of Accounts Receivable (A)
58300
Opening Balance for Stock
247900
Sales Revenue (B)
1253000
Closing Stock
220600
Closing Balance of Accounts Rceivable ( C)
75000
COGS
717300
Cash Receipts from Customers (A+B-C)
1236300
Purchases
690000
Opening Balance of Accounts Payable
113800
Opening prepaid
7000
Purchases
690000
Expenses
8100
Closing Balance of Accounts Payable
123400
Closing
9100
Cash paid to suppliers
680400
Prepaid expenses paid
10200
Opening Balance of Salaries and Wages Payable
71900
Opening Balance of Interest Payable
25100
Expense
252500
Expense
74600
Closing Balance of Salaries and Wages Payable
47600
Closing Balance of Interest Payable
26900
Cash paid to Employees
276800
Cash paid to Employees
72800
Opening Balance of Equity
280000
Opening Balance Retained Earnings
124300
Shares issued for Plant
70000
Profit Earned
131700
Shares issued for Cash
20000
Dividend paid
109800
Closing Balance of Equity
370000
Closing Balance Retained Earnings
146200
Particulars
Amount
Amount
Cashflow from Operating Activities
Cash Receipts from Customers
1236300
Cash paid to suppliers
-680400
Prepaid expenses paid
-10200
Cash paid to Employees
-276800
Taxes paid
-43000
Interest Paid
-72800
Net Cash from Operating Activities
153100
Cashflow from Investing Activities
Purchase of Plant
-25200
Net Cash from Investing Activties
-25200
Cashflow from Financing Activities
Bonds repaid
-30000
Proceeds from Issue of Shares
20000
Dividend Paid
-109800
Net Cash from Financing Activities
-119800
Net increase in cash and cash equivalents
8100
Cash and cash equivalents at beginning of period
20000
Cash and cash equivalents at end of period
28100
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