Condensed financial data of Cheng Inc. follow. CHENG INC. Comparative Balance Sh
ID: 2589511 • Letter: C
Question
Condensed financial data of Cheng Inc. follow.
CHENG INC.
Comparative Balance Sheets
December 31
Assets
2015
2014
$89,410
$47,620
92,080
33,070
112,160
102,050
28,570
25,180
137,890
113,100
270,370
242,020
(50,840
)
(51,790
)
$679,640
$511,250
Liabilities and Stockholders’ Equity
$111,880
$67,620
16,040
17,060
112,180
149,070
220,990
175,060
218,550
102,440
$679,640
$511,250
CHENG INC.
Income Statement
For the Year Ended December 31, 2015
$391,360
134,260
11,180
47,330
27,980
4,430
6,930
232,110
$159,250
Additional information:
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).)
CHENG INC.
Statement of Cash Flows
For the Year Ended December 31, 2015
Adjustments to reconcile net income to
CHENG INC.
Comparative Balance Sheets
December 31
Assets
2015
2014
Cash$89,410
$47,620
Accounts receivable92,080
33,070
Inventory112,160
102,050
Prepaid expenses28,570
25,180
Investments137,890
113,100
Equipment270,370
242,020
Accumulated depreciation—equipment(50,840
)
(51,790
)
Total$679,640
$511,250
Liabilities and Stockholders’ Equity
Accounts payable$111,880
$67,620
Accrued expenses payable16,040
17,060
Bonds payable112,180
149,070
Common stock220,990
175,060
Retained earnings218,550
102,440
Total$679,640
$511,250
Explanation / Answer
Indirect method of cash flow cash from operating activities Net income for the year 159,250 Adjustments to reconcile net income Depreciation expense 47,330 loss on disposal of plant assets 6,930 increase in accounts receivabe -59010 increase in inventory -10110 increase in prepaid expense -3390 increase in accounts payable 44260 decrease in accured expenses payable -1020 24,990 Net cash flow from operating activities 184,240 cash flow from investing activities cash paid for purchase of new equipment -84,570 cash from sale of Equipment 1,010 cash paid for purchase of investment -24790 Cash used by investing activities -108,350 cash flow from financing activities cash dividend -43140 Redemption of bonds -36890 cash from stock issue 45930 Cash paid for financing activitiy -34,100 net increase in cash 41,790 cash at beginning of the year 47,620 cash at year end 89,410
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