The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 a
ID: 2568398 • 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
$146,480.00
$179,640.00
4
Accounts receivable (net)
225,010.00
241,920.00
5
Merchandise inventory
321,600.00
298,870.00
6
Prepaid expenses
13,030.00
10,420.00
7
Equipment
654,380.00
537,900.00
8
Accumulated depreciation-equipment
(169,970.00)
(133,130.00)
9
Total assets
$1,190,530.00
$1,135,620.00
10
Liabilities and Stockholders’ Equity
11
Accounts payable (merchandise creditors)
$250,960.00
$236,720.00
12
Mortgage note payable
0.00
335,410.00
13
Common stock, $10 par
75,000.00
25,000.00
14
Paid-in capital: Excess of issue price over par—common stock
440,000.00
310,000.00
15
Retained earnings
424,570.00
228,490.00
16
Total liabilities and stockholders’ equity
$1,190,530.00
$1,135,620.00
Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2016 are as follows:
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$146,480.00
$179,640.00
4
Accounts receivable (net)
225,010.00
241,920.00
5
Merchandise inventory
321,600.00
298,870.00
6
Prepaid expenses
13,030.00
10,420.00
7
Equipment
654,380.00
537,900.00
8
Accumulated depreciation-equipment
(169,970.00)
(133,130.00)
9
Total assets
$1,190,530.00
$1,135,620.00
10
Liabilities and Stockholders’ Equity
11
Accounts payable (merchandise creditors)
$250,960.00
$236,720.00
12
Mortgage note payable
0.00
335,410.00
13
Common stock, $10 par
75,000.00
25,000.00
14
Paid-in capital: Excess of issue price over par—common stock
440,000.00
310,000.00
15
Retained earnings
424,570.00
228,490.00
16
Total liabilities and stockholders’ equity
$1,190,530.00
$1,135,620.00
Explanation / Answer
Del Ray Enterprises Inc Cash Flow Statement For year ended 31 December 2016 Cash flows from operating activities Net Income $ 348,560 Adjustment to reconcile net income to: Depreciation expense $ 82,480 Changes in current operating assets and liabilities Increase in accounts receivable $ 16,910 Decrease in inventories $ (22,730) Increase in prepaid expenses $ (2,610) Increase in accounts payable $ 14,240 $ 88,290 Net cash provided by operating activities $ 436,850 Cash flows from investing activities Purchase of Equipment $ (162,120) Net cash used by investing activities $ (162,120) Cash flows from financing activities Proceeds from issue of shares $ 180,000 Mortgage note repaid $ (335,410) Dividend paid $ (152,480) Net cash Used by financing activities $ (307,890) Net increase in cash and cash equivalents $ (33,160) Cash and cash equivalents at beginning of period $ 179,640 Cash and cash equivalents at end of period $ 146,480