Question

The Murdock Corporation reported the following balance sheet data for 2016 and 2015:    2016 2015...

The Murdock Corporation reported the following balance sheet data for 2016 and 2015:

  

2016 2015
  Cash $ 96,245 $ 33,155
  Available-for-sale securities (not cash equivalents) 24,000 102,000
  Accounts receivable 97,000 83,550
  Inventory 182,000 160,300
  Prepaid insurance 3,030 3,700
  Land, buildings, and equipment 1,284,000 1,142,000
  Accumulated depreciation (627,000 ) (589,000 )
  Total assets $ 1,059,275 $ 935,705
  Accounts payable $ 91,640 $ 165,670
  Salaries payable 26,800 33,000
  Notes payable (current) 40,300 92,000
  Bonds payable 217,000 0
  Common stock 300,000 300,000
  Retained earnings 383,535 345,035
  Total liabilities and shareholders' equity $ 1,059,275 $ 935,705

  

Additional information for 2016:
Sold available-for-sale securities costing $78,000 for $84,200.
Equipment costing $20,000 with a book value of $6,700 was sold for $8,550.
Issued 6% bonds payable at face value, $217,000.
Purchased new equipment for $162,000 cash.
Paid cash dividends of $28,500.
Net income was $67,000.
Required:

Prepare a statement of cash flows for 2016 in good form using the indirect method for cash flows from operating activities. (Amounts to be deducted should be indicated with a minus sign.)

Homework Answers

Answer #1
Murdock Corporation
Statement of Cash Flows (Partial)
Cash flows from operating activities
Net Income     67,000
Adjustment for noncash effects:
Depreciation expense     51,300
Gain on sale of securities     (6,200)
Gain on sale of equipment     (1,850)
Changes in current assets and current liabilities
Increase in accounts receivable, net (13,450)
Increase in inventory (21,700)
Decrease in prepaid expense         670
Decrease in accounts payable (74,030)
Decrease in salaries payable     (6,200)
Decrease in note payable (51,700)
Net cash flow operating activities       (56,160)
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