The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is
ID: 2392132 • Letter: T
Question
The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is shown as follows:
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$626,170.00
$585,760.00
4
Accounts receivable (net)
227,840.00
208,880.00
5
Inventories
641,390.00
616,790.00
6
Investments
0.00
240,820.00
7
Land
327,380.00
0.00
8
Equipment
704,290.00
554,020.00
9
Accumulated depreciation-equipment
(167,160.00)
(148,930.00)
10
Total assets
$2,359,910.00
$2,057,340.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$424,670.00
$404,080.00
13
Accrued expenses payable (operating expenses)
43,080.00
52,050.00
14
Dividends payable
24,920.00
19,300.00
15
Common stock, $4 par
140,000.00
102,000.00
16
Paid-in capital: Excess of issue price over par—common stock
417,400.00
280,600.00
17
Retained earnings
1,309,840.00
1,199,310.00
18
Total liabilities and stockholders’ equity
$2,359,910.00
$2,057,340.00
Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows:
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section.
X
Statement of Cash Flows
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$626,170.00
$585,760.00
4
Accounts receivable (net)
227,840.00
208,880.00
5
Inventories
641,390.00
616,790.00
6
Investments
0.00
240,820.00
7
Land
327,380.00
0.00
8
Equipment
704,290.00
554,020.00
9
Accumulated depreciation-equipment
(167,160.00)
(148,930.00)
10
Total assets
$2,359,910.00
$2,057,340.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$424,670.00
$404,080.00
13
Accrued expenses payable (operating expenses)
43,080.00
52,050.00
14
Dividends payable
24,920.00
19,300.00
15
Common stock, $4 par
140,000.00
102,000.00
16
Paid-in capital: Excess of issue price over par—common stock
417,400.00
280,600.00
17
Retained earnings
1,309,840.00
1,199,310.00
18
Total liabilities and stockholders’ equity
$2,359,910.00
$2,057,340.00
Explanation / Answer
Cromme Inc.
Statement of cash flows
For the year ended December 31, 2016
Working note:
Dividend payable Account
I. Cash flows from operating activities Net income 206,210 Depreciation on equipment 18,230 Gain on sale of investment - 39,070 Operating profit before working capital changes Increase in Accounts receivables - 18,960 Increase in Inventories - 24,600 Increase in Accounts payable 20,590 Decrease in Accrued expenses payable - 8,970 Net cash flows from operating activities 153,430 II. Cash flows from Investing activities Sale of investments 279,890 Purchase of Land (327,380) Purchase of equipment (150,270) Net cash used in investing activities - 197,760 III. Cash flows from Financing Activities Cash dividend paid (90,060) Issue of common stock (38,000 + 136,800) 174,800 Net cash flows from Financing activities 84,740 Net increase in cash (I + II + III) 40,410 Add: Opening balance of cash 585,760 Closing balance of cash 626,170