Headland Corporation’s balance sheet at the end of 2016 included the following i

ID: 2562615 • Letter: H

Question

Headland Corporation’s balance sheet at the end of 2016 included the following items
iPad 2:51 AM 91% 16e Kieso, Intermediate Hele I ASSIGNMENT RESOURCES Exercise 5-17 Headland Corporation's balance sheet at the end of 2016 included the following items Current assets (Cash $82,000) $236,420 Current liabilities $151,420 Land Hw4 32,610 Bonds payable 101 121,420 Common stock 182,610 92,610 Retained earnings 46,610 (31,420) Total (11,000) 41,420 ,420 Buildings $482,060 Accum. depr-buildings Accum. depr-equipment Patents Review Results by StudyA objective Total $482,060 The following information is available for 2017 1. Net income was $60,370 2. Equipment (cost $21,420 and accumulated depreciation $9,420) was sold for $11,420. 3. Depreciation expense was $5,420 on the building and $10,420 on equipment. 4. Patent amortization was $2,500 5. Current assets other than cash increased by $29,000. Current liabilities increased by $14,420. 6. An addition to the building was completed at a cost of $28,420 7. A long-term investment (Equity) in stock was purchased for $16,000 8. Bonds payable of $52,610 were issued. 9. Cash dividends of $30,000 were declared and paid. 10. Treasury stock was purchased at a cost of $11,000 Prepare a statement of cash flows for 2017. (Show amounts that decrease cash flow with elther a-sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Explanation / Answer

Headland Corporation

Statement of Cash Flows

For the year ended 2017

Cash Flow from Operating Activities:

Net Income

$60,370

Adjustments for:

Depreciation Expense (building) (Non cash item)

$5,420

Depreciation Expense (Equipment) (Non cash item)

$10,420

Amortization of Patent

$2,500

Loss on Sale of Equipment (Carrying value 21420-9420) - Sale 11,420)

$580

Operating Profit before working capital changes:

$79,290

Adjustment for:

Increase in Current Asset

-$29,000

Increase in Current Liabilties

$14,420

Net Cash provided by Operative Activities

$64,710

Cash Flow from Investing Activities:

Purchase of Building

-$28,420

Sale of Equipment

$11,420

Purchase of long term investment

-$16,000

Net Cash used by Investing Activities

-$33,000

Cash Flow from Financing Activities:

Proceeds from issuance of bonds

$52,610

Dividend Paid

-$30,000

Treasury Stock Purchased

-$11,000

Net Cash provided by Financing Activities

$11,610

Net Increase/(Decrease) in Cash and Cash Equivalents

$43,320

Cash and Cash Equivalents at the beginning of the year

$82,000

Cash and Cash Equivalents at the end of the year

$125,320