The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 a
ID: 2557201 • Letter: T
Question
The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 and 2015, is as follows:
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$147,270.00
$180,220.00
4
Accounts receivable (net)
224,490.00
241,070.00
5
Merchandise inventory
321,930.00
299,210.00
6
Prepaid expenses
13,120.00
9,890.00
7
Equipment
655,170.00
536,180.00
8
Accumulated depreciation-equipment
(171,750.00)
(131,210.00)
9
Total assets
$1,190,230.00
$1,135,360.00
10
Liabilities and Stockholders’ Equity
11
Accounts payable (merchandise creditors)
$249,380.00
$237,500.00
12
Mortgage note payable
????0.00
336,240.00
13
Common stock, $10 par
73,000.00
23,000.00
14
Paid-in capital: Excess of issue price over par—common stock
460,000.00
310,000.00
15
Retained earnings
407,850.00
228,620.00
16
Total liabilities and stockholders’ equity
$1,190,230.00
$1,135,360.00
Additional data obtained from the income statement and 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 and enter in the order listed on the Instructions page.
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 sectionand enter in the order listed on the Instructions page.
Del Ray Enterprises 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
Changes in current operating assets and liabilities:
6
7
8
9
10
11
12
Cash flows from investing activities:
13
14
15
16
Cash flows from financing activities:
17
18
19
20
21
22
Cash at the beginning of the year
23
Cash at the end of the year
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$147,270.00
$180,220.00
4
Accounts receivable (net)
224,490.00
241,070.00
5
Merchandise inventory
321,930.00
299,210.00
6
Prepaid expenses
13,120.00
9,890.00
7
Equipment
655,170.00
536,180.00
8
Accumulated depreciation-equipment
(171,750.00)
(131,210.00)
9
Total assets
$1,190,230.00
$1,135,360.00
10
Liabilities and Stockholders’ Equity
11
Accounts payable (merchandise creditors)
$249,380.00
$237,500.00
12
Mortgage note payable
????0.00
336,240.00
13
Common stock, $10 par
73,000.00
23,000.00
14
Paid-in capital: Excess of issue price over par—common stock
460,000.00
310,000.00
15
Retained earnings
407,850.00
228,620.00
16
Total liabilities and stockholders’ equity
$1,190,230.00
$1,135,360.00
Explanation / Answer
STATEMENT SHOWING CASH FLOWs FOR THE YEAR ENDING 31 DEC, 2016 Cash flows from Operating Activities: AMOUNT $ Net Income during the year 332,260 Adjustments to be made for reconciling net income to cashflows Depreciation expense 84,950 Decrease in Accounts receivable 16,580 Increase in Inventory -22,720 Increase in Prepaid insurance -3,230 Increase in Accounts payable 11,880 Net Cash provided from Operating Activities 419,720 Cash Flows from Investing Activities: Purchase of Equipment -163,400 Net Cash used in Investing Activities -163,400 Cash Flows from Financing Activities: Mortgage Loan payable -336,240 Dividend paid -153,030 Issue of Common Stock 200,000 Net Cash used in Financing Activities -289,270 Net Cash decrease during the year -32,950 Add: Beginning balance of cash 180,220 Ending Balance of Cash 147,270