The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 a
ID: 2414928 • Letter: T
Question
The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 and 2015, is as follows:
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$146,600.00
$179,800.00
4
Accounts receivable (net)
224,600.00
242,000.00
5
Merchandise inventory
321,600.00
299,200.00
6
Prepaid expenses
13,400.00
9,600.00
7
Equipment
655,000.00
537,000.00
8
Accumulated depreciation-equipment
(170,800.00)
(132,200.00)
9
Total assets
$1,190,400.00
$1,135,400.00
10
Liabilities and Stockholders’ Equity
11
Accounts payable (merchandise creditors)
$250,200.00
$237,600.00
12
Mortgage note payable
0.00
336,000.00
13
Common stock, $10 par
74,000.00
24,000.00
14
Paid-in capital: Excess of issue price over par—common stock
470,000.00
320,000.00
15
Retained earnings
396,200.00
217,800.00
16
Total liabilities and stockholders’ equity
$1,190,400.00
$1,135,400.00
Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2016 are as follows:
A.
Net income, $332,000
B.
Depreciation reported on the income statement, $83,400
C.
Equipment was purchased at a cost of $162,800 and fully depreciated equipment costing $44,800 was discarded, with no salvage realized.
D.
The mortgage note payable was not due until 2018 but the terms permitted earlier payment without penalty.
E.
10,000 shares of common stock were issued at $20 for cash.
F.
Cash dividends declared and paid, $153,600
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.
I have the statement of cash flows, but I need help with the spreadsheet (worksheet) for statement of cash flows.
DEL RAY ENTERPRISES INC.
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash flows from operating activities:
Net income
$ 332,000
Adjustments to reconcile net income to net cash
flow from operating activities:
Depreciation
83,400
Changes in current operating assets and liabilities:
Decrease in accounts receivable
17,400
Increase in merchandise inventory
(22,400)
Increase in prepaid expenses
(3,800)
Increase in accounts payable
12,600
Net cash flow from operating activities
$ 419,200
Cash flows from investing activities:
Less cash paid for purchase of equipment
$ (162,800)
Net cash flow used for investing activities
(162,800)
Cash flows from financing activities:
Cash received from sale of common stock
$ 200,000
Less cash paid for dividends
(153,600)
Less cash paid to retire mortgage note payable
(336,000)
Net cash flow used for financing activities
(289,600)
Increase (decrease) in cash
$ (33,200)
Cash at the beginning of the year
179,800
Cash at the end of the year
$ 146,600
DEL RAY ENTERPRISES INC.
Spreadsheet (Work Sheet) for Statement of Cash Flows
For the Year Ended December 31, 2016
Balance,
Transactions
Balance,
Dec. 31, 2015
Debit
Credit
Dec. 31, 2016
Cash
179,800
146,600
Accounts receivable (net)
242,000
224,600
Merchandise inventory
299,200
321,600
Prepaid expenses
9,600
13,400
Equipment
537,000
655,000
Accum. depr. - equipment
(132,200)
(170,800)
Accounts payable
(237,600)
(250,200)
Mortgage note payable
(336,000)
-
Common stock, $25 par
(24,000)
(74,000)
Paid-in capital in excess of par
(320,000)
(470,000)
Retained earnings
(217,800)
(396,200)
Totals
-
-
Operating activities:
Net income
Depreciation
Decrease in accounts receivable
Increase in merchandise inventory
Increase in prepaid expenses
Increase in accounts payable
Investing activities:
Purchase of equipment
Financing activities:
Payment of cash dividends
Sale of common stock
Payment of mortgage note payable
Net decrease in cash
Totals
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$146,600.00
$179,800.00
4
Accounts receivable (net)
224,600.00
242,000.00
5
Merchandise inventory
321,600.00
299,200.00
6
Prepaid expenses
13,400.00
9,600.00
7
Equipment
655,000.00
537,000.00
8
Accumulated depreciation-equipment
(170,800.00)
(132,200.00)
9
Total assets
$1,190,400.00
$1,135,400.00
10
Liabilities and Stockholders’ Equity
11
Accounts payable (merchandise creditors)
$250,200.00
$237,600.00
12
Mortgage note payable
0.00
336,000.00
13
Common stock, $10 par
74,000.00
24,000.00
14
Paid-in capital: Excess of issue price over par—common stock
470,000.00
320,000.00
15
Retained earnings
396,200.00
217,800.00
16
Total liabilities and stockholders’ equity
$1,190,400.00
$1,135,400.00
Explanation / Answer
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2016
OPERATING ACTIVITY NET INCOME $332000 ADD DEPRICIATION $83400 ADD DECEREASE IN ACCOUNTS RECEIVABLE $17400 LESS INCEREASE IN MERCHANDISE INVENTORY ($22400) LESS INCEREASE IN PREPAID WXPENSES ($3800) ADD INCEREASE IN ACCOUNTS PAYBLE $12600 NET CASH FLOW FROM OPERATING ACTIVITY $419200 INVESTING ACTIVITY PURCHASE OF EQUIPEMENT ($162800) NET CASH FLOW FROM INVESTING ACTIVITY ($162800) FINACING ACTIVITY CASH RECEIVED FROM ISSUE OF COMMON STOCK $200000 LESS PAYMENT OF CASH DIVIDEND ($153600) LESS CASH PAYMENT FOR MORTAGE NOTE PAYBLE ($336000) NET CASH FLOW FROM FINANCING ACTIVITY ($289600) NET INCEREASE (DECEREASE) IN CASH ($33200) CASH AT BEGINNING $179800 CASH AT ENDING $146600