Comparative balance sheet accounts of Bridgeport Inc. are presented below. BRIDG

Question

Comparative balance sheet accounts of Bridgeport Inc. are presented below.

BRIDGEPORT INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2017 AND 2016

December 31

2017

2016

$42,400

$33,900

70,600

60,300

30,100

24,100

22,000

38,900

30,300

18,700

67,900

55,700

7,600

7,600

$270,900

$239,200

$2,300

$1,500

5,600

2,200

13,500

8,900

34,700

24,500

3,500

2,600

21,000

30,800

150,000

125,000

40,300

43,700

$270,900

$239,200

Additional data (ignoring taxes):

Bridgeport’s 2017 income statement follows (ignoring taxes).

$540,400

381,000

159,400

119,300

40,100

$3,700

(800

2,900

$43,000

(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).)

BRIDGEPORT INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2017 AND 2016

December 31

Debit Accounts

2017

2016

Cash

$42,400

$33,900

Accounts Receivable

70,600

60,300

Inventory

30,100

24,100

Equity investments

22,000

38,900

Machinery

30,300

18,700

Buildings

67,900

55,700

Land

7,600

7,600

$270,900

$239,200

Credit Accounts Allowance for Doubtful Accounts

$2,300

$1,500

Accumulated Depreciation—Machinery

5,600

2,200

Accumulated Depreciation—Buildings

13,500

8,900

Accounts Payable

34,700

24,500

Accrued Payables

3,500

2,600

Long-Term Notes Payable

21,000

30,800

Common Stock, no-par

150,000

125,000

Retained Earnings

40,300

43,700

$270,900

$239,200

Explanation / Answer

Requirement a:

Calculation of net cash flow from operating activities under direct method:

Notes:

Requirement b:

Statements of cash flows under indirect method:

Particulars

Amount ($)

Cash from operating Activities

Net Income

43000

Add: Depreciation

         loss on sale of machinery

          Gain on sale of investments

          Interest Paid

          Income Tax Expense       

        

8750

800

-3700

Cash Operating activities before working capital adjustments, and taxes

48850

Working Capital Adjustments

Add:

        Increase in Accounts Payable (34700-24500)

         Increase in accrued payables (3500-2600)

          Increase in Doubtful debts (2300-1500)

10200

900

800

Less: Increase in Inventory (30100-24100)

        Increase in Accounts Receivable (70600-60300)

          Decrease in Accrued Liabilities

-6000

-10300

Cash from operating activities before taxes and extraordinary items

44450

Less: Extraordinary loss

Cash From operating activities before taxes

Less: Taxes

Cash from operating activities

44450

Cash from investing activities

Add: Sale of machinery

Add: Sales of Investment

Less: Purchase of Machinery (30300-(18700-3800)

Less: Investment made (22000-(38900-24700))

Less: Purchase of building (67900-55700)

2250

28400

-15400

-7800

-12200

Cash from Investing Activities

-4750

Cash from financing Activities

Add: Issue of notes payable

Add: Issue of common stock

Less: Repurchase of own stock

Less: Payment of notes payable (30800-21000)

Less: Cash Dividend paid

Less: Interest Paid

-9800

-21400

Cash from financing activities

-31200

Net Increase / decrease in cash

8500

Opening Cash Balance

33900

Closing Cash Balance

42400

Cash from operating activities Cash from sales 525858 Cash paid for purchases -376800 Cash paid for expenses -104608 44450

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