rndamentals of AC 1288 8314855 (Kingsborough cc) CH17 Hw17.1 Exercise 17-8 Here

Question

rndamentals of AC 1288 8314855 (Kingsborough cc) CH17 Hw17.1 Exercise 17-8 Here are comparative balance sheets for Velo Company. VELO COMPANY Comparative Balance Sheets December 31 2016 $33,000 71,400 Assets Cash Accounts receivable Inventory Land Equipment Accumulated depreciation-equipment 2017 $72,600 86,300 170,500 186,600 73,800 100,800 260,000 200,800 (65,900) (34,100) $597,300 $558,500 Total Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock ($1 par) Retained earnings $35,400 $47,000 151,100 204,000 214,900 174,700 195,900 132,800 $597,300 $558,500 Total Additional information: 1. Net income for 2017 was $104,800. 2. Cash dividends of $41,700 were declared and paid. 3. Bonds payable amounting to $52,900 were redeemed for cash $52,900 4. Common stock was issued for $40,200 cash. 5. No equipment was sold during 2017, but land was sold at cost. Prepare a statement of cash flows for 2017 using the indirect method. (Show amou decrease cash flow with either a -sign e.g.-15,000, or in parenthesis e.g. (1

Explanation / Answer

Net Income 104800 Adjustment to reconcile net income Depreceiation 31800 (65900-34100) Changes in current Assets and current liabilities increases in account receivables -14900 Decreaes in inventory 16100 Decreaes in accounts payable -11600 21400 Net cash flows from operating actvities 126200 Cash flows from investment activities Sale of land 27000 (100800-73800) purchase of equipment -59200 -32200 (260000-200800) Cash flows from financing activity Issue of common stock 40200 (214900-1747000) cash dividend paid -41700 bonds redeemed for cash -52900 -54400 Net increase in cash 39600 Opening Balance 33000 Closing Balance 72600

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