Condensed financial data of Blossom Company follow Blossom Company Comparative B

Question

Condensed financial data of Blossom Company follow Blossom Company Comparative Balance Sheets December 31 Assets Cash Accounts receivable Inventory Prepaid expenses Long-term investments Plant assets Accumulated depreciation Total 2017 2016 $116,160 91,200 246,840 62,400 261,600 582,000 $193,920 210,720 270,000 68,160 331,200 684,000 (120,000 124,800) $1,638,000 $1,235,400 Liabilities and Stockholders' Equity Accounts payable Accrued expenses payable Bonds payable Common stock Retained earnings Total $ 161,520 50,400 350,400 420,000 253,080 $1,638,000 $1,235,400 $244,800 39,600 264,000 528,000 561,600 Blossom Company Income Statement Data For the Year Ended December 31, 2017 Sales revenue $932,304 Less Cost of goods sold Operating expenses, excluding depreciation Depreciation expense Income tax expense Interest expense Loss on disposal of plant assets $325,104 29,784 111,600 65,472 11,352 18,000 561,312 $370,992 Net income Additional information: 1. New plant assets costing $240,000 were purchased for cash during the year 2. Old plant assets having an original cost of $138,000 and accumulated depreciation of $116,400 were sold for $3,600 cash 3. Bonds payable matured and were paid off at face value for cash. 4. A cash dividend of $62,472 was declared and paid during the year Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with elther a -sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Explanation / Answer

Net cash flow from operating activities Net income 370,992 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense 111,600 loss on disposal of plant assets 18,000 increase in accounts receivable -119520 increase in inventory -23160 increase in prepaid expense -5760 increase in accounts payable 83280 decrease in accrued expenses payable -10800 53,640 Net cash provided by operating activities 424,632 Cash from investing activities purchase of new plant asset -240,000 cash from sale of plant asset 3,600 Cash paid for purchase of investment -69600 Cash used by investing activities -306,000 Net cash from financing activities Cash dividend -62,472 Redemption of bonds -86400 cash from stock issue 108000 Cash used by financing activities -40,872 -40,872 Net increase in cash 77,760 cash at beginning of the year 116,160 cash at year end 193,920

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