Q6: The balance sheet data of Wheels ‘n Tires, Inc. at the end of 2012 and 2011
ID: 2596573 • Letter: Q
Question
Q6: The balance sheet data of Wheels ‘n Tires, Inc. at the end of 2012 and 2011 follow.
2012 2011
Cash $ 7,500 $ 10,000
Accounts receivable (net) 82,000 87,500
Merchandise inventory 86,000 81,000
Prepaid expenses 9,000 12,000
Equipment 170,000 145,000
Accumulated depreciation—equipment (45,000) (36,000)
Land 30,000 50,000
Total assets $339,500 $349,500
Accounts payable $ 44,500 $ 58,000
Accrued expenses 11,000 9,000
Notes payable—bank, short-term –0– 50,000
Bonds payable 20,000 –0–
Common stock, $1 par 181,000 160,000
Retained earnings 83,000 72,500
Total liabilities and shareholders’ equity $339,500 $349,500
Equipment was purchased for $21,000 in exchange for common stock, par $21,000, during the year; all other equipment purchased was for cash. Land was sold for $31,500. Cash dividends of $7,000 were declared and paid during the year.
Instructions
Compute net cash provided (used) by:
(a) operating activities.
(b) investing activities.
(c) financing activities.
Explanation / Answer
Working Notes
Cash Flow statement Cash flow from operating activities Detail Amount Net Income ($83000-$72500+7000) 17500 Non cash items: Depreciation 9000 Non operating incomes/losses Gain on sale of land -11500 Working Capital Adjustments: Decrease in accounts receivables 5500 Decrease in prepaid expenses 3000 Increase in Inventory -5000 Decrease in a/c payable -13500 Increase in accrued expenses 2000 Net cash flow from operating activities 7000 Cash flows from investing activities Cash received from sale of land 31500 Cash paid for purchase of equipment -4000 Net cash flow from investing activities 27500 Cash flows from financing activities Cash paid for dividends -7000 Repayment of notes payable -50000 Cash received from issue of bonds 20000 Net cash flow used in financing activities -37000 Decrease in cash -2500 Opening cash balance 10,000 Closing cash balance 7500Related Questions
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