The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is
ID: 2495952 • Letter: T
Question
The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is shown as follows:
Question not attempted.
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$625,760.00
$585,920.00
4
Accounts receivable (net)
227,840.00
208,960.00
5
Inventories
641,760.00
617,120.00
6
Investments
0.00
240,000.00
7
Land
328,000.00
0.00
8
Equipment
705,120.00
553,120.00
9
Accumulated depreciation-equipment
(166,400.00)
(148,000.00)
10
Total assets
$2,362,080.00
$2,057,120.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$424,480.00
$404,960.00
13
Accrued expenses payable (operating expenses)
42,240.00
52,640.00
14
Dividends payable
24,000.00
19,200.00
15
Common stock, $4 par
150,000.00
100,000.00
16
Paid-in capital: Excess of issue price over par—common stock
417,500.00
280,000.00
17
Retained earnings
1,303,860.00
1,200,320.00
18
Total liabilities and stockholders’ equity
$2,362,080.00
$2,057,120.00
Additional data obtained 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
The section of the statement of cash flows that reports the cash transactions affecting the determination of net income.
. 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.
In CengageNOW, a Label is a text entry that does not have an amount associated with it.
In CengageNOW, an Amount Description is a text entry other than an Account that has an amount associated with it.
Net income
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities
The section of the statement of cash flows that reports the cash transactions affecting the determination of net income.
. 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.
Question not attempted.
Cromme 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
6
Changes in current operating assets and liabilities:
7
8
9
10
11
12
13
Cash flows from investing activities:
14
15
16
17
18
19
Cash flows from financing activities:
20
21
22
23
24
Cash at the beginning of the year
25
Cash at the end of the year
Solution
Cromme 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
6
Changes in current operating assets and liabilities:
7
8
9
10
11
12
13
Cash flows from investing activities:
14
15
16
17
18
19
Cash flows from financing activities:
20
21
22
23
24
Cash at the beginning of the year
25
Cash at the end of the year
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$625,760.00
$585,920.00
4
Accounts receivable (net)
227,840.00
208,960.00
5
Inventories
641,760.00
617,120.00
6
Investments
0.00
240,000.00
7
Land
328,000.00
0.00
8
Equipment
705,120.00
553,120.00
9
Accumulated depreciation-equipment
(166,400.00)
(148,000.00)
10
Total assets
$2,362,080.00
$2,057,120.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$424,480.00
$404,960.00
13
Accrued expenses payable (operating expenses)
42,240.00
52,640.00
14
Dividends payable
24,000.00
19,200.00
15
Common stock, $4 par
150,000.00
100,000.00
16
Paid-in capital: Excess of issue price over par—common stock
417,500.00
280,000.00
17
Retained earnings
1,303,860.00
1,200,320.00
18
Total liabilities and stockholders’ equity
$2,362,080.00
$2,057,120.00
Explanation / Answer
The cash flow statement is as follows:
Cash Flow Statement Particulars Amount Net Profit as per P&L 199540 Depreciation 18400 Less: Profit on sale of investment -40000 Add: Increase in current liabilities/ Decrease in assets Accounts payable 19520 Less: Decrease in Liabilities / Incraese in assets Accounts Receivable 18880 Inventory 24640 Accrued Expenses 10400 Cash Flow from operating activities 143540 Cash flow from investing activities Sold equipment 280000 Purchase of equipment 152000 Purchase Land 328000 Cash flow from investing activities -200000 Cash flow from financing activities Common stock (150000-100000) 50000 Paid in capital 137500 Dividend Paid 91200 Cash Flow from financing activities 96300 Total Cash Flow 39840 Opening cash and cash equivalents 585920 Closing cash and cash equivalents 625760