Question

SAFFORDVILLE COMPANY Comparative Balance Sheets December 31 Assets 2017 2016 Cash $102,700 $ 33,400 Accounts receivable...

SAFFORDVILLE COMPANY

Comparative Balance Sheets

December 31

Assets

2017

2016

Cash

$102,700

$ 33,400

Accounts receivable

60,800

37,000

Inventory

126,900

102,650

Investments

79,500

107,000

Equipment

315,000

205,000

Accumulated depreciation—equipment

(44,500)

(40,000)

Total

$640,400

$445,050

Liabilities and Stockholders’ Equity

Accounts payable

$ 57,700

$ 48,280

Accrued expenses payable

15,100

18,830

Bonds payable

145,000

70,000

Common stock

250,000

200,000

Retained earnings

172,600

107,940

Total

$640,400

$445,050

SAFFORDVILLE COMPANY

Income Statement

For the Year Ended December 31, 2017

Sales revenue

$297,500

Gain on disposal of plant assets

5,000

302,500

Less:

Cost of goods sold

$99,460

Operating expenses, excluding

depreciation

19,670

Depreciation expense

30,500

Income tax expense

37,270

Interest expense

2,940

189,840

Net income

$112,660

Additional information:

1.   New equipment costing $146,000 was purchased for cash during the year.

2.   Investments were sold at cost.

3.   Equipment costing $36,000 was sold for $15,000, resulting in a gain of $5,000.

4.   A cash dividend of $48,000 was declared and paid during the year.

Instructions

Prepare a statement of cash fl ows for Saffordville Company using the direct method.

Business   Accounting   
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Answer #1
SAFFORDVILLE COMPANY-CASH FLOW STATEMENT
Cash flow from operating Activities in $ in $
Net Income 112660
Add or subtract that effect net income
Depreciation 30500 30500
Changes in operating Assets & Liabilities
Cash(102700-33400) 69300
Accounts receivable(37000-60800) -23800
Inventory(102650-126900) -24250
Equipment(205000-315000) -110000
Investments(107000-79500) 27500
Accounts Payable(57000-48280) 8720
Accrued expenses payable(15100-18830) -3730
Bond payable(145000-70000) 75000
Common stock(250000-200000) 50000
Retained earnings(172600-107940) 64660
New equipment purchased in cash(assume that which is not considered in given Balance sheet) -146000
Cash Dividend(assume that which is not considered in the given Balance sheet) -48000 -60600
Net Cash Balance as on 31.12.2017 82560
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