ICE Drilling Inc.’s balance sheet information and income statement are as follow

Question

ICE Drilling Inc.’s balance sheet information and income statement are as follows:

Additional information regarding ICE Drilling’s activities during 2017:
1. Loss on sale of equipment is $13,480.
2. Paid $72,280 to reduce a long-term note payable.
3. Equipment costing $115,000, with accumulated depreciation of $73,000, is sold for cash.
4. Equipment costing $217,880 is purchased by paying cash of $58,000 and signing a long-term note payable for the balance.
5. Borrowed $8,400 by signing a short-term note payable.
6. Issued 10,080 common shares for cash at $10 per share.
7. Declared and paid cash dividends of $141,160.

Required:
Prepare a statement of cash flows for 2017 that reports the cash inflows and outflows from operating activities according to the indirect method. (List any deduction in cash and cash outflows as negative amounts.)

ICE Drilling Inc. Income Statement For Year Ended December 31, 2017   Sales $ 1,113,600   Cost of goods sold 570,000   Gross profit $ 543,600   Operating expenses:      Depreciation expense $ 52,000      Other expenses 307,760      Total operating expenses 359,760   Profit from operations 183,840   Loss on sale of equipment   13,480   Profit before taxes $ 170,360   Income taxes 29,160   Profit $ 141,200

Explanation / Answer

notes payable purchased ending balance on 2017 210,000 ending balance on 2016 122,200 Redeemed during the year -72,280 49,920 notes payable for Equipment purchase 160,080 Cash from sale of Equipment original cost 115,000 less accumulated dep -73,000 book value 42,000 less loss on sale -13,480 Cash from sale of Equipment 28,520 Statement of cash flow Cash from operating activities net income for the year 141,200 Adjustments to reconcile profit to cash flows from operating activities Depreciation expense 52,000 loss on sale of Equipment 13,480 increase in account receivable -34440 increase in merchandise inventory -47600 decrease in prepaid expense 11860 Decrease in accounts payable -53740 Cash flow from operating activities 82,760 Cash flow from investing activities cash from sale of Equipment 28,520 Cash paid for purchase of Equipment -58,000 Cash used by investing activities -29,480 Cash flow from financing activity cash paid to reduce long term note -72,280 cash from short term note payable 8,400 Cash from stock issue 100800 Cash dividend -141,160 Cash used by financing activity -104,240 -104,240 Net decrease in cash -50,960 Cash at the beginning of the year 181,640 Cash at year end 130,680

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---