The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 a
ID: 2421895 • 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:
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.
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 (Indirect Method) Cash flows from operating activities Net Income $ 3,32,000 Adjustments for: Depreciation and Amortaization $ 83,400 Loss on Sale of Fixed Assets $ 1,18,000 1,62,800-44,800 $ 2,01,400 Decrease in Trade Receiveble $ 17,400 Increase in Inventory $ -22,400 Increase in Prepaid Expenses $ -3,800 Increase in Accounts Payable $ 12,600 Decrease in Mortgage Note Payable $ -3,36,000 $ -3,32,200 Cash Generated from Operations $ 2,01,200 Cash flows from investing activities Purchase of property, plant, and equipment $ -2,80,800 118000-162800 Net cash used in investing activities $ -2,80,800 Cash flows from financing activities Proceeds from issue of common stock $ 2,00,000 Dividends Paid $ -1,53,600 Net cash used in financing activities $ 46,400 Net increase in cash and cash equivalents $ -33,200 Cash and cash equivalents at beginning of period $ 1,79,800 Cash and cash equivalents at end of period $ 1,46,600