Problem 17-9A Condensed financial data of Cheng Inc. follow. CHENG INC. Comparat
ID: 2380187 • Letter: P
Question
CHENG INC.
Comparative Balance Sheets
December 31 Assets 2014 2013 Cash $90,650 $48,360 Accounts receivable 92,350 33,780 Inventory 112,560 102,930 Prepaid expenses 28,870 25,140 Investments 137,790 114,760 Equipment 270,680 242,740 Accumulated depreciationâequipment (49,280 ) (51,130 ) Total $683,620 $516,580 Liabilities and Stockholdersâ Equity Accounts payable $112,000 $67,290 Accrued expenses payable 16,030 17,280 Bonds payable 119,220 149,300 Common stock 220,380 174,120 Retained earnings 215,990 108,590 Total $683,620 $516,580
CHENG INC.
Income Statement
For the Year Ended December 31, 2014 Sales $392,250 Less: Cost of goods sold 134,490 Operating expenses, excluding depreciation 11,310 Depreciation expense 46,430 Income tax expense 27,940 Interest expense 4,190 Loss on disposal of plant asstets 6,750 231,110 Net income $161,140
Additional information:
1. New Equipment costing $84,150 were purchased for cash during the year. 2. Old Equipment having an original cost of $56,210 was sold for $1,180 cash. 3. Bonds matured and were paid off at face value for cash. 4. A cash dividend of $53,740 was declared and paid during the year.
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).)
CHENG INC.
Statement of Cash Flows
For the Year Ended December 31, 2014 $ Adjustments to reconcile net income to $ $
Explanation / Answer
Cash at the beginning $48,360 Cash flow from Op Activities Net Income $161,140 Adjustment to reconcile Dep Expenses 46,430 Loss on disposal of plant asstets 6,750 Increase in Acc Payable $44,710 Increase in Acc Recv -58,570 Increase in Inventory -9,630 Prepaid Expe increase -3,730 Decreas in Acrrued Exp payable -1,250 Net Cash Provided by Op Activiteis $234,210 Cash flow from Inv Activities Sale of Equipment 1180 Purchase of Equipment -84150 Purchse of Investments -23,030 Net Cash Used by Inv Activies -106,000 Cash flow from Financing Activities Retirement of Bonds -30,080 Payment of Dividends -53740 Issuance of Common stock 46,260 Net Cash Used by Financing Activies -37,560 Cash at the end $90,650