The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is
ID: 2557200 • Letter: T
Question
The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is shown as follows:
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$625,680.00
$586,230.00
4
Accounts receivable (net)
228,100.00
208,850.00
5
Inventories
640,910.00
617,650.00
6
Investments
0.00
240,620.00
7
Land
328,090.00
0.00
8
Equipment
704,540.00
553,320.00
9
Accumulated depreciation-equipment
(166,310.00)
(147,840.00)
10
Total assets
$2,361,010.00
$2,058,830.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$425,280.00
$404,550.00
13
Accrued expenses payable (operating expenses)
41,990.00
52,020.00
14
Dividends payable
24,190.00
20,170.00
15
Common stock, $4 par
142,000.00
106,000.00
16
Paid-in capital: Excess of issue price over par—common stock
416,700.00
279,900.00
17
Retained earnings
1,310,850.00
1,196,190.00
18
Total liabilities and stockholders’ equity
$2,361,010.00
$2,058,830.00
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. 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.
Labels and Amount Descriptions
Statement of Cash Flows
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. 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.
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
$625,680.00
$586,230.00
4
Accounts receivable (net)
228,100.00
208,850.00
5
Inventories
640,910.00
617,650.00
6
Investments
0.00
240,620.00
7
Land
328,090.00
0.00
8
Equipment
704,540.00
553,320.00
9
Accumulated depreciation-equipment
(166,310.00)
(147,840.00)
10
Total assets
$2,361,010.00
$2,058,830.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$425,280.00
$404,550.00
13
Accrued expenses payable (operating expenses)
41,990.00
52,020.00
14
Dividends payable
24,190.00
20,170.00
15
Common stock, $4 par
142,000.00
106,000.00
16
Paid-in capital: Excess of issue price over par—common stock
416,700.00
279,900.00
17
Retained earnings
1,310,850.00
1,196,190.00
18
Total liabilities and stockholders’ equity
$2,361,010.00
$2,058,830.00
Explanation / Answer
Solution:
Cromme Inc. Statement of Cash Flows (Indirect Method) For year ended December 31, 2016 Particulars Details Amount Cash Flow from Operating Activities: Net Income $211,240.00 Adjustments to reconcile net income to net cash flow from operating activitiess: Gain on sale of investment ($279,190 - $240,620) -$38,570.00 Depreciation ($166,310 - $147,840) $18,470.00Changes in current operating assets and liabilities: Increase in accounts receivables ($228,100 - $208,850) -$19,250.00 Increase in inventories ($640,910 - $617,650) -$23,260.00 Increase in accounts payable ($425,280 - $404,550) $20,730.00 Decrease in accrued expenses payable ($52,020 - $41,990) -$10,030.00 Net cash flow from operating activities $159,330.00 Cash Flow from Investing Activities: Cash received from sale of investments $279,190.00 Cash paid for purchase of land -$328,090.00 Cash paid for purchase of equipment ($704,540 - $553,320) -$151,220.00 Net cash flow used for investing activities -$200,120.00 Cash Flow from Financing Activities: Cash received from sale of common stock ($142,000 + $416,700 - $106,000 - $279,900) $172,800.00 Cash paid for dividends ($20,170 + $96,580 - $24,190) -$92,560.00 Net cash flow from financing activities $80,240.00 Net Increase / (Decrease) in Cash $39,450.00 Cash balance at beginning of year $586,230.00 Cash balance at end of year $625,680.00