Problem 23-6 Comparative balance sheet accounts of Kingbird Inc. are presented b
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Question
Problem 23-6
Comparative balance sheet accounts of Kingbird Inc. are presented below.
KINGBIRD INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2017 AND 2016
December 31
2017
2016
$42,300
$33,800
71,100
59,900
30,100
24,100
22,400
38,600
30,200
18,800
67,800
56,000
7,600
7,600
$271,500
$238,800
$2,200
$1,600
5,700
2,300
13,300
9,100
35,300
24,700
3,500
2,600
20,800
30,900
150,000
125,000
40,700
42,600
$271,500
$238,800
Additional data (ignoring taxes):
Kingbird’s 2017 income statement follows (ignoring taxes).
$543,100
381,100
162,000
120,700
41,300
$3,800
(800
3,000
$44,300
(a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
(b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
$
KINGBIRD INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2017 AND 2016
December 31
Debit Accounts2017
2016
Cash$42,300
$33,800
Accounts Receivable71,100
59,900
Inventory30,100
24,100
Equity investments22,400
38,600
Machinery30,200
18,800
Buildings67,800
56,000
Land7,600
7,600
$271,500
$238,800
Credit Accounts Allowance for Doubtful Accounts$2,200
$1,600
Accumulated Depreciation—Machinery5,700
2,300
Accumulated Depreciation—Buildings13,300
9,100
Accounts Payable35,300
24,700
Accrued Payables3,500
2,600
Long-Term Notes Payable20,800
30,900
Common Stock, no-par150,000
125,000
Retained Earnings40,700
42,600
$271,500
$238,800
Explanation / Answer
a)
a)
Cash Flows from Operating activities: Cash receipts from customers 532500 Payments to suppliers -376500 Payment for expenses -111450 -487950 Net cash provided by operating activities 44550 Cash Receipt schedule Beginning Accounts receivable 59900 Add: Sales 543100 Less Closing accounts receivable -71100 Less: baddebts writeoff (1600-2200+5823) 600 Cash receipts from Customers 532500 Cash payment to supplers Schedule Beginning Accounts payable 24700 Add: cost of goods sold 381100 Less Closing accounts payable -35300 Add: Ending inventory 30100 Less: beginning inventory -24100 Cash payment to suppliers 376500 Cash payment for Expenses Operating Expenses 120700 Less: Depreciation -8350 Add:beginning Accrued payables 2600 Less Ending accrued payables -3500 cash payment to expenses 111450 b) Cash flow - Indirect Method Cash flows from operating activities: Net income 44300 Adjustments to reconcile net income with net cash from operating activities: Depreciation 8350 gain on sale of investments -3800 loss on sale of machinery 800 bad debts written off 600 increase in accrued payables 900 increase in accounts receivable -11200 increase in inventory -6000 increase in accounts payable 10600 250 Net cash from operating activities 44550 Cash flows from investing activities: sale of investments 28700 addition to buildings -11800 sale of machinery 2200 purchase of machinery (30200-18800+3700) -15100 purchase of investments 24900- (38600-22400) -8700 Net cash from investing activities -4700 Cash flows from financing activities: cash dividends paid -21200 notes payable repaid -10100 Net cash from financing activities -31300 Net increase in cash 8550 Beginning balance of cash 33800 Ending balance of cash 42300Related Questions
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