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Assignment Worksheet: Use the comparative balance sheets of Chandler Electric Company on December 31, 2016 to...

Assignment Worksheet:

Use the comparative balance sheets of Chandler Electric Company on December 31, 2016 to prepare the two requirements:

----------------------------------------------------------------------------------------------------------------

2016                                            2015

Current Assets

Cash                                      $     85,400                                  $      21,500

Accounts Receivable                  14,800                                         21,500

Merchandise Inventory

63,000

59,400

Current Liabilities

Accounts Payable

$      27,100

$      26,100

Accrued Liabilities

10,400

10,900

---------------------------------------------------------------------------------------------------------------------------------------

Chandler Electric Company’s transactions during 2016 included the following:

----------------------------------------------------------------------------------------------------------------

Payment of cash dividends

$ 20,200

Depreciation expense

$   17,000

Purchase of equipment with cash

55,100

Purchase of building with cash

102,000

Issuance of long-term notes payable to borrow cash

47,000

Net income

59,600

Issuance of common stock for cash

114,000

----------------------------------------------------------------------------------------------------------------

Requirement 1: Prepare the Statement of Cash Flows for Chandler Electric Company

Chandler Electric Company

Statement of Cash Flows

Year Ended December 31, 2016

Cash Flows from Operating Activities:

     Net Income

59,600$

Adjustments to Reconcile Net Income to Net   Cash Provided by Operating Activities:

Depreciation Expense—Plant Assets

$17,000

Decrease in Accounts Receivable

Increase in Merchandise Inventory

                 ()

Increase in Accounts Payable

Decrease in Accrued Liabilities

                 ()

Net Cash Provided by Operating Activities

Cash Flows from Investing Activities:

     Acquisition of Equipment for Cash

              ()

     Acquisition of Building for Cash

              ()

Net Cash Used for Investing Activities

           ()

Cash Flows from Financing Activities:

     Cash Receipt from Issuance of Common Stock

     Cash Receipt from Issuance of Notes Payable

Cash Payment of Dividends

             ()

Net Cash Provided by Financing Activities

Net Increase (Decrease) in Cash

Cash Balance, December 31, 2015

Cash Balance, December 31, 2016

Requirement 2:

Write an evaluation of the cash flow statement for Chandler Electric Company. The COO of Chandler Electric Company has asked that you evaluate the company’s cash flow based on the following criteria:

How strong or weak is its cash flow?

What is the primary generator of the company’s income?

In what area is the company investing most?

How much did the overall cash position increase in the past year?

Do you feel Chandler Electric Company is worthy of short term and long term capital?

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