Question

The Comparative Balance Sheet for SOX Company showed the following information. Additional information concerning transactions and events during 2018 are presented below.

SOX Company

Balance Sheet

	October 31			Change
	2018		2017
Cash and cash equivalents	$35,900		$10,200
Accounts receivable	48,300		20,300
Inventory	33,000		40,500
Prepaid expenses	2,000		1,500
Long-term investments	0		15,000
Property, plant & equipment	236,500		150,000
Accumulated depreciation	(37,700)		(25,000)
Net Property, plant &   equipment	198,800		125,000
Total Assets	$318,000		$212,500
Accounts payable	$10,000		$26,500
Accrued liabilities	8,000		17,000
Long-term notes payable	120,000		50,000
Common Stock	100,000		90,000
Retained Earnings	80,000		29,000
Total Liabilities & Stockholder’s Equity	$318,000		$212,500

1. Net income for the year 2018 was $90,000 and the only other change in retained earnings was dividend payments.
2. A machine costing $10,000 with accumulated depreciation of $8,000 was sold for $3,000.
3. Depreciation for 2018 was $20,700.
4. Sold the long-term investments in 2018 for proceeds of $15,000, which resulted in a no gain or loss.
5. Purchased machinery costing $36,500, paid cash.
6. Purchased additional machinery by directly issuing a $60,000 long-term note payable. An additional $10,000 was borrowed during the year and no payments were made.

Instructions

Prepare a Statement of Cash Flows, in proper form (using the indirect method) for 2018 for SOX Company. Include any required disclosures based on the information given. PLEASE DO NOT ABBREVIATE WHEN PREPARING THE STATEMENT.

Answer 1

Dividends Payments = Opening Retained Earnings + Net Income - Closing Retained earnings

Dividends Payments = 29000 + 90000 - 80000 = $39000