The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 a
ID: 2484980 • 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.
Explanation / Answer
Answer:
Del Ray Enterprises Inc. Cash flow statement Cash Flow from operating activities: Net income 332000 Adjustment to reconcile net income to net cash flow from operating activities: Add: Depreciation 83400 Changes in current operating assets and liabilities: Add: Decrease in A/R 17400 Less: Increase in inventory 22400 Less: increase in prepaid expenses 3800 Add: increase in A/P 12600 Net cash flow from operating activities 419200 Cash flow from investing activities: Less: Cash paid for purchase of new equipment 162800 Net cash flow from investing activities -162800 Cash flow from financing actvities: Add: issuance of common stock for cash (10000 shares * $20 each share) 200000 Less: decrease in mortagages payable 336000 Less:dividends paid 153600 Net cash flow from financing activities -289600 Net cash used by all activities -33200 Add: beginning cash balance 179800 Ending cash balance 146600