CE Drilling Inc.\'s balance sheet information and income statement are as follow
ID: 2550590 • Letter: C
Question
CE Drilling Inc.'s balance sheet information and income statement are as follows ICE Drilling Inc. Income Statement For Year Ended December 31.2017 Sales Cost of goods sold $1,113,400 569,000 $544,400 Gross profit Operating expenses Depreciation expense Other expenses $ 51,000 307,560 lotal operating expenses Profit from operations Loss on sale of equipment 358,560 185,840 13,280 Profit before taxes Income taxes $ 172,560 28,960 Profit $ 143,600 ICE Drilling Inc Comparative Balance Sheet Information December 31 2017 2016 Cash Accounts receivable Merchandise inventory Prepaid expenses Equipment Accumulated depreciation Accounts payable Current notes payable $129,680 $180,640 154,600 622,200 12,130 359,080 86,560 190,290 31,400 120,160 574,600 23,000 255,400 107,560 245,040 23,000Explanation / Answer
notes payable purchased ending balance on 2017 210,000 ending balance on 2016 122,200 Redeemed during the year -72,080 50,120 notes payable for Equipment purchase 159,880 Cash from sale of Equipment original cost 114,000 less accumulated dep -72,000 book value 42,000 less loss on sale -13,280 Cash from sale of Equipment 28,720 Statement of cash flow Cash from operating activities net income for the year 143,600 Adjustments to reconcile profit to cash flows from operating activities Depreciation expense 51,000 loss on sale of Equipment 13,280 increase in account receivable -34440 increase in merchandise inventory -47600 decrease in prepaid expense 10870 Decrease in accounts payable -54750 Cash flow from operating activities 81,960 Cash flow from investing activities cash from sale of Equipment 28,720 Cash paid for purchase of Equipment -57,800 Cash used by investing activities -29,080 Cash flow from financing activity cash paid to reduce long term note -72,080 cash from short term note payable 8,400 Cash from stock issue 100800 Cash dividend -140,960 Cash used by financing activity -103,840 Net decrease in cash -50,960 Cash at the beginning of the year 180,640 Cash at year end 129,680 merchandise inventory increase caused by the purchase of inventory prepaid expense Decrease caused by the use of prepaid expenses notes payable increases caused by the issuance of debt(borrowing) Common shares increases caused by the issuance of shares and/or share dividends