The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 a
ID: 2477204 • 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.
Statement of Cash Flows
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.
Del Ray Enterprises Inc.
Statement of Cash Flows
1
Cash flows from operating activities:
2
3
Adjustments to reconcile net income to net cash flow from operating activities:
4
5
Changes in current operating assets and liabilities:
6
7
8
9
10
11
12
Cash flows from investing activities:
13
14
15
16
Cash flows from financing activities:
17
18
19
20
21
22
Cash at the beginning of the year
23
Cash at the end of the year
Explanation / Answer
Del Ray Enterprises Inc. Statement of Cash Flows For the year ended Dec. 31, 2016 Cash flows from operating activities: Net Income $3,32,000 Changes in current operating assets and liabilities: Depreciation $83,400 Decreasein Acounts receivable $17,400 Increase in Merchandise Inventory -$22,400 Increase in Prepaid Expense -$3,800 Increase in Accounts Payable $12,600 $87,200 Net cash flow from Operating Activities $4,19,200 Cash flows from investing activities: Purchase of Equipment -$1,62,800 Net cash outflow from Investing Activities -$1,62,800 Cash flows from financing activities: Issue of common stock $2,00,000 Payment of Cash Dividends -$1,53,600 Repayment of Mortgage note payable -$3,36,000 Net cash outflow from Financing Activities -$2,89,600 Net Decrease in cash -$33,200 Cash at the beginning of the year $1,79,800 Cash at the end of the year $1,46,600