The comparative balance sheet of Tru-Built Construction Inc. for December 31, 20
ID: 2493925 • Letter: T
Question
The comparative balance sheet of Tru-Built Construction Inc. for December 31, 2014 and 2013, is as follows:
The following additional information is taken from the records:
Land was sold for $23.
Equipment was acquired for cash.
There were no disposals of equipment during the year.
The common stock was issued for cash.
There was a $69 credit to Retained Earnings for net income.
There was a $21 debit to Retained Earnings for cash dividends declared.
a. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required.
Dec. 31, 2014 Dec. 31, 2013 Assets Cash $104 $33 Accounts receivable (net) 59 42 Inventories 37 23 Land 85 94 Equipment 48 36 Accumulated depreciation-equipment (13) (7) Total $320 $221 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $40 $33 Dividends payable 6 - Common stock, $10 par 21 10 Paid-in capital in excess of par-common stock 53 26 Retained earnings 200 152 Total $320 $221Explanation / Answer
Cash flows from operating activities:
Net income= $69
Adjustments to reconcile net income to net cash
flow from operating activities:
Depreciation $6
Profit on sale of land -$15
Changes in current operating assets and liabilities:
Increase in accounts receivable (net) -$17
Increase in inventories -$14
Increase in accounts payable $7
Net cash flow from operating activities $36
Cash flow from investing activities:
Purchase of equipment -$6
Sale of land $23
Net cash flow from investing activities $17
Cash flow from financing activities:
Issue of common stock $11
premium received $27
Net cash flow from financing activities $38
Net cash flow $91
Add:opening cash $33
Closing cash $104