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Exercise 12-7 Shown below are comparative balance sheets for Mitch Company. Mitch Company Comparative Balance Sheets...

Exercise 12-7 Shown below are comparative balance sheets for Mitch Company. Mitch Company Comparative Balance Sheets December 31 Assets 2017 2016 Cash $ 68,000 $ 22,000 Accounts receivable 88,000 76,000 Inventory 167,000 189,000 Land 80,000 100,000 Equipment 260,000 200,000 Accumulated depreciation—equipment (66,000 ) (32,000 ) Total $597,000 $555,000 Liabilities and Stockholders’ Equity Accounts payable $ 39,000 $ 43,000 Bonds payable 150,000 200,000 Common stock ($1 par) 216,000 174,000 Retained earnings 192,000 138,000 Total $597,000 $555,000 Additional information: 1. Net income for 2017 was $93,000. 2. Depreciation expense was $34,000. 3. Cash dividends of $39,000 were declared and paid. 4. Bonds payable amounting to $50,000 were redeemed for cash $50,000. 5. Common stock was issued for $42,000 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. -15,000, or in parenthesis e.g. (15,000)). Mitch Company Statement of Cash Flows $ Adjustments to reconcile net income to $ $

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Answer #1

statement of cash flows for 2017 using the indirect method.

Cash flow from operating activities
Net income 93000
Adjustment to reconcile net income to cash flow from operating activities
Depreciation expense 34000
Increase account receivable -12000
Decrease inventory 22000
Decrease account payable -4000
40000
Net cash flow from operating activities 133000
Cash flow from investing activities
Sale of land 20000
Purchase of equipment -60000
Net cash flow from investing activities -40000
Cash flow from financing activities
Redemption of bonds -50000
Dividend paid -39000
Issue common Stock 42000
Net cash flow from financing activities -47000
Net Cash flow 46000
Beginning cash 22000
Ending cash 68000
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