Problem 12-9A Condensed financial data of Pharoah Company follow. Pharoah Compan
ID: 2408097 • Letter: P
Question
Problem 12-9A
Condensed financial data of Pharoah Company follow.
Pharoah Company
Comparative Balance Sheets
December 31
Assets
2017
2016
$ 154,328
$ 92,444
167,698
72,580
214,875
196,444
54,244
49,660
263,580
208,190
544,350
463,175
(95,500
)
(99,320
)
$1,303,575
$983,173
Liabilities and Stockholders’ Equity
$ 194,820
$ 128,543
31,515
40,110
210,100
278,860
420,200
334,250
446,940
201,410
$1,303,575
$983,173
Pharoah Company
Income Statement Data
For the Year Ended December 31, 2017
$741,959
$258,729
23,703
88,815
52,105
9,034
14,325
446,711
$ 295,248
Additional information:
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).)
Adjustments to reconcile net income to
Pharoah Company
Comparative Balance Sheets
December 31
Assets
2017
2016
Cash$ 154,328
$ 92,444
Accounts receivable167,698
72,580
Inventory214,875
196,444
Prepaid expenses54,244
49,660
Long-term investments263,580
208,190
Plant assets544,350
463,175
Accumulated depreciation(95,500
)
(99,320
)
Total$1,303,575
$983,173
Liabilities and Stockholders’ Equity
Accounts payable$ 194,820
$ 128,543
Accrued expenses payable31,515
40,110
Bonds payable210,100
278,860
Common stock420,200
334,250
Retained earnings446,940
201,410
Total$1,303,575
$983,173
Explanation / Answer
Pharoah Company Statement of Cash Flows For the Year Ended December 31, 2017 Cash flows from operating activities Net Income $ 295,248 Adjustments to reconcile net income to : Depreciation expense $ 88,815 Loss on disposal of plant assets $ 14,325 Increase in accounts receivable $ (95,118) 72580-167698 Increase in inventory $ (18,431) 196444-214875 Increase in prepaid expenses $ (4,584) 49660-54244 Increase in accounts payable $ 66,277 194820-128543 Decrease in accrued expense payable $ (8,595) 31515-40110 $ 42,689 Net cash provided by operating activities $ 337,937 Cash flows from investing activities sale of plant assets $ 2,865 purchase of long term investments $ (55,390) 208190-263580 Cash paid for purchase of plant assets $ (191,000) Net cash used by investing activities $ (243,525) Cash flows from financing activities Cash paid as dividend $ (49,718) Redumption of bond $ (68,760) 210100-278860 Cash received from issuance of common stock $ 85,950 420200-334250 Net cash used by financing activities $ (32,528) Net Increase in cash and cash equivalents $ 61,884 Cash and cash equivalents at beginning of period $ 92,444 Cash and cash equivalents at end of period $ 154,328