The following is the Choco Company balance sheet and income statement as of Dece
ID: 2596691 • Letter: T
Question
The following is the Choco Company balance sheet and income statement as of December 31, 2016.
During 2016, following transactions were made:
1) Sold long term investment for a loss of $7,500 (sold for 52,500)
2) $30,000 of bonds payable matured in 2016.
3) Paid cash dividends of $45,000
a) What is the amount of cash inflow/outflow from their customers? (assume Sales are all credit sales)
b) what is the amount of cash inflow/outflow from the loss on the sales of long-term investment?
c) what is the amount of cash inflow/outflow from their suppliers?
d) What is the amount of cash inflow/outflow from their employess?
e) What is the amount of cash inflow/outflow from their long-term investment?
f) What is the amount of cash inflow/outflow regarding the maturity of their bonds payable?
g) What is the amount of cash inflow/outflow regarding the cash dividends?
h) Using the above balance sheet, income statement and information from a to g, prepare the entire cash flow statement using the direct method.
BALANCE SHEET 2015 2016 Assets Cash 120000 21500 Accounts Receivable 105000 195000 Inventory 225000 180000 Long-Term Investments 60000 0 Total Assets 510000 396500 Liabilities & Stockholders Equity Accounts Payable 120,000 75000 Salary Payable 15000 24000 Bonds Payable 100000 70000 Common Stock 125000 125000 Retained Earning 150000 102500 Total Liabilities & Stockholders 510000 396500 INCOME STATEMENT 2016 Revenue: Sales 560,000 Loss on sales of Long -Term Investment -7500 Expenses: Cost of Goods Sold -375000 Salary Expense -180000 Net Income (loss) -2,500Explanation / Answer
a.
b. gain or loss impacts income statement, not cash flow. hence loss of 7500 should be added back in income from operations section in cash flow statement
c.
d.
e. cash inflow from sale of long term investment= 52500
f. 30000
g. 45000
h. Cash flow statement:
Cash collection: Particulars Amount Opening balance of accounts receivables 105000 Add: credit sales 560000 Less: closing balance 195000 Cash collection 470000Related Questions
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