Ivanhoe Company Comparative Balance Sheets December 31 Assets 2017 2016 Cash $ 1
ID: 2590939 • Letter: I
Question
Ivanhoe Company
Comparative Balance Sheets
December 31
Assets
2017
2016
Cash
$ 156,536
$ 50,644
Accounts receivable
202,576
174,952
Inventory
384,434
435,078
Land
184,160
230,200
Equipment
598,520
460,400
Accumulated depreciation—equipment
(151,932
)
(73,664
)
Total
$1,374,294
$1,277,610
Liabilities and Stockholders’ Equity
Accounts payable
$ 89,778
$ 98,986
Bonds payable
345,300
460,400
Common stock ($1 par)
497,232
400,548
Retained earnings
441,984
317,676
Total
$1,374,294
$1,277,610
Additional information:
1.
Net income for 2017 was $214,086.2.
Depreciation expense was $78,268.
3.
Cash dividends of $89,778 were declared and paid.
4.
Bonds payable amounting to $115,100 were redeemed for cash $115,100.
5.
Common stock was issued for $96,684 cash.
6.
No equipment was sold during 2017.
7.
Land was sold for its book value.
Prepare a statement of cash flows for 2017 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -45,000, or in parenthesis e.g. (45,000)).
Ivanhoe Company
Comparative Balance Sheets
December 31
Assets
2017
2016
Cash
$ 156,536
$ 50,644
Accounts receivable
202,576
174,952
Inventory
384,434
435,078
Land
184,160
230,200
Equipment
598,520
460,400
Accumulated depreciation—equipment
(151,932
)
(73,664
)
Total
$1,374,294
$1,277,610
Liabilities and Stockholders’ Equity
Accounts payable
$ 89,778
$ 98,986
Bonds payable
345,300
460,400
Common stock ($1 par)
497,232
400,548
Retained earnings
441,984
317,676
Total
$1,374,294
$1,277,610
Explanation / Answer
Ivanhoe Company Cash Flow Statement For the year ended December 31, 2017 Cash flows from operating activities Net Income $ 214,086 Adjustment to reconcile net income to: Depreciation expense $ 78,268 Increase in accounts receivable $ (27,624) Decrease in inventory $ 50,644 Decrease in accounts payable $ (9,208) Total adjustments $ 92,080 Net cash provided by operating activities $ 306,166 Cash flows from investing activities Purchase of equipment $ (138,120) Proceeds from sale of land $ 46,040 Net cash used by investing activities $ (92,080) Cash flows from financing activities Proceeds from issue of stock (12,000*$5) $ 96,684 Redemption of bonds $ (115,100) Dividend paid $ (89,778) Net cash used by financing activities $ (108,194) Net increase in cash and cash equivalents $ 105,892 Cash and cash equivalents at beginning of period $ 50,644 Cash and cash equivalents at end of period $ 156,536
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