Question

Presented below are the financial statements of Vaughn Manufacturing. Vaughn Manufacturing Comparative Balance Sheets December 31...

Presented below are the financial statements of Vaughn Manufacturing.

Vaughn Manufacturing
Comparative Balance Sheets
December 31

Assets

2017

2016

Cash

$ 59,500

$ 34,000

Accounts receivable

34,000

23,800

Inventory

47,600

34,000

Property, plant, and equipment

102,000

132,600

Accumulated depreciation

(54,400

)

(40,800

)

Total

$188,700

$183,600

Liabilities and Stockholders’ Equity

Accounts payable

$ 32,300

$ 25,500

Income taxes payable

11,900

13,600

Bonds payable

28,900

56,100

Common stock

30,600

23,800

Retained earnings

85,000

64,600

Total

$188,700

$183,600

Vaughn Manufacturing
Income Statement
For the Year Ended December 31, 2017

Sales revenue

$411,400

Cost of goods sold

297,500

Gross profit

113,900

Selling expenses

$30,600

Administrative expenses

10,200

40,800

Income from operations

73,100

Interest expense

5,100

Income before income taxes

68,000

Income tax expense

13,600

Net income

$ 54,400


Additional data:

1. Depreciation expense was $29,750.
2. Dividends declared and paid were $34,000.
3.

During the year equipment was sold for $14,450 cash. This equipment cost $30,600 originally and had accumulated depreciation of $16,150 at the time of sale.

Prepare a statement of cash flows 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).)

Homework Answers

Answer #1
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash Flows from Operating Activities:
Net income 54400
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense 29750
Increase in Accounts receivable -10200
Increase in inventory -13600
Increase in accounts payable 6800
Decrease in Income taxes payable -1700
11050
Net cash provided by operating activities 65450
Cash Flows from Investing Activities:
Sale of Equipment 14450
Cash Flows from Financing Activities
Payment of Cash Dividends -34000
Redemption of Bonds Payable -27200
Issuance of Common Stock 6800
Net Cash Used by Financing Activities -54400
Net Increase in Cash 25500
Cash at Beginning of Period 34000
Cash at End of Period 59500
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