The comparative balance sheet of Martinez Inc. for December 31, 2016 and 2015, i
ID: 2537240 • Letter: T
Question
The comparative balance sheet of Martinez Inc. for December 31, 2016 and 2015, is as follows:
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$661,920.00
$683,100.00
4
Accounts receivable (net)
992,640.00
914,400.00
5
Inventories
1,394,400.00
1,363,800.00
6
Investments
0.00
432,000.00
7
Land
960,000.00
0.00
8
Equipment
1,224,000.00
984,000.00
9
Accumulated depreciation-equipment
(481,500.00)
(368,400.00)
10
Total assets
$4,751,460.00
$4,008,900.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$1,080,000.00
$966,600.00
13
Accrued expenses payable (operating expenses)
67,800.00
79,200.00
14
Dividends payable
100,800.00
91,200.00
15
Common stock, $5 par
130,000.00
30,000.00
16
Paid-in capital: Excess of issue price over par—common stock
950,000.00
450,000.00
17
Retained earnings
2,422,860.00
2,391,900.00
18
Total liabilities and stockholders’ equity
$4,751,460.00
$4,008,900.00
The income statement for the year ended December 31, 2016, is as follows:
1
Sales
$4,512,000.00
2
Cost of merchandise sold
2,352,000.00
3
Gross profit
$2,160,000.00
4
Operating expenses:
5
Depreciation expense
$113,100.00
6
Other operating expenses
1,344,840.00
7
Total operating expenses
1,457,940.00
8
Operating income
$702,060.00
9
Other income:
10
Gain on sale of investments
156,000.00
11
Income before income tax
$858,060.00
12
Income tax expense
299,100.00
13
Net income
$558,960.00
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 direct method of presenting cash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign only to indicate the net cash outflows for each section. “Deduct”, “Less” or colons (:) will automatically appear if required.
Accounts Description:
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$661,920.00
$683,100.00
4
Accounts receivable (net)
992,640.00
914,400.00
5
Inventories
1,394,400.00
1,363,800.00
6
Investments
0.00
432,000.00
7
Land
960,000.00
0.00
8
Equipment
1,224,000.00
984,000.00
9
Accumulated depreciation-equipment
(481,500.00)
(368,400.00)
10
Total assets
$4,751,460.00
$4,008,900.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$1,080,000.00
$966,600.00
13
Accrued expenses payable (operating expenses)
67,800.00
79,200.00
14
Dividends payable
100,800.00
91,200.00
15
Common stock, $5 par
130,000.00
30,000.00
16
Paid-in capital: Excess of issue price over par—common stock
950,000.00
450,000.00
17
Retained earnings
2,422,860.00
2,391,900.00
18
Total liabilities and stockholders’ equity
$4,751,460.00
$4,008,900.00
Martinez Inc. Statement of Cash Flows (Label) 1 Cash flows from operating activities: 8Cash flows from investing activities: 10 12 13Explanation / Answer
Statement of Cash Flow using Direct Method Particulars Amount in $ Cash Flow From Operating Activities Cash received from customers (W. Note-1) 4433760 Less : Cash payments for merchandise (W. Note-2) -2269200 Less :Cash payment for Operating expenses (W.Note-3) -1356240 Cash generated from operations 808320 Less :Cash payments for income taxes -299100 Net cash from operating activities (A) 509220 Cash flows from investing activities Cash Paid for Land -960000 Cash received from sale of investments 588000 Cash paid for equipment -240000 Net cash used in investing activities (B) -612,000 Cash flows from financing activities Cash received from sale of common stock 100000 Proceeds from Excess of issue price over par—common stock 500000 Cash paid For dividend(W.Note -4) -518400 Net cash used in financing activities ( C) 81,600 Net increase in cash and cash equivalents (A+B+C) -21,180 Cash at the beginning of the Year 683,100 Cash at the end of the Year 661920 W.Note-1- Cash receieved from customers Beginning Account Receivable 914400 Add :Sale During the year 4512000 Less : Ending Account Receivable -992640 4433760 W.Note-2- Cash payments for merchandise Beginning Account Payable 966600 Add :Ending Inventory 1394400 Less :Beginning Inventory -1363800 Add :Sale During the year 2352000 Less : Ending Account Payable -1080000 2269200 W.Note-3-Cash paid for Operating expenses Beginning Accured expenses 79200 Add :Operating Expenses During the year 1344840 Less : Ending Accured expenses -67800 1356240 W.Note-4- Cash paid For dividends Beginning Dividend Payable 91200 Add :Dividend Declared 528000 Less : Ending Dividend Payable -100800 518400