Patel Winery, Inc. Comparative Balance Sheet December 31, 2017 and 2016 2017 201
ID: 2568970 • Letter: P
Question
Patel Winery, Inc. Comparative Balance Sheet December 31, 2017 and 2016 2017 2016 Current assetse Cash and cash equivalents $26,400 $15,900 $10,500 Accounts receivablie Inventory 1,200 79,80091,700 (11,900) 11,000 23,600 26,700 Plant assets: Land Equipment, net Total assets 271400 $233.800$37600 Current liabilities: Accounts payable $35,500 $30,600$4,900 Accrued liabilities Notes payable Common stock 28,600 78,000 88,800 30,700 101,000 64,900 (2,100) (23,000) 23,900 Long-term liabilities: Stockholders' Equity Retained earnings 40.5006.60033.900 Total liabilities and stockholder equity $221.400 $233.800 $37.600 Patel Winery, Inc. Income Statement Year Ended December 31, 2017 $436,000 Sales revenues Interest revenue 444,000 Total revenues Expenses: Cost of goods sold Salary expense Depreciation expense Other operating expenses Interest expense Income tax expense $202,200 78,400 14,400 10,200 21,900 Total expenses Net income Additionally, Patel Winery, Inc. purchased land of S23600 by financing 100% with long-term notes payable during 2017. During the year, there were no sales of land or equipment, no additional issuances of notes payable, no retirement of stock, and no treasury stock transactions. 1. Prepare the 2017 statement of cash flows, using the indirect method. n Your thoughts on the health of this company?Explanation / Answer
Answer:
Patel Winery Ince
Statement of cash flow
Indirect Method
Cash flows from operating activities
Net income
97,800.00
Adjustments to reconcile net income to net cash
provided by operating activity
Depreciation
14,400.00
Increase in trade and other receivables
(1,200.00)
Decrease in inventories
11,900.00
Increase in trade payables
4,900.00
Decrease in Accrued Liability
(2,100.00)
27,900.00
Net cash from operating activities
125,700.00
Cash flows from investing activities
cash payment for acquisition equipment
(28,600.00)
Net cash used in investing activities
(28,600.00)
Cash flows from financing activities
Proceeds from issue of share capital
23,900.00
cash payment of notes payable (23000+23600)
(46,600.00)
Payment of dividend
(63,900.00)
Net cash used in financing activities
(86,600.00)
Net increase in cash and cash equivalents
10,500.00
Cash and cash equivalents at beginning of period
15900
Cash and cash equivalents at end of period
26,400.00
Working notes for the answer:
1
Equipment purchased for cash
Equipment balance balance on2016+Purchase-depriciation
103900 =87900+purchase -14400
Purchase of equipment =103900+14400-87900
Purchase of equipment =$28,600
2
Dividend
Retained earnings balance earning balance on2016+net income-dividend
405000 =6600+97800-devidend
dividend=97800+6600-40500
dividend =$63900
Patel Winery Ince
Statement of cash flow
Indirect Method
Cash flows from operating activities
Net income
97,800.00
Adjustments to reconcile net income to net cash
provided by operating activity
Depreciation
14,400.00
Increase in trade and other receivables
(1,200.00)
Decrease in inventories
11,900.00
Increase in trade payables
4,900.00
Decrease in Accrued Liability
(2,100.00)
27,900.00
Net cash from operating activities
125,700.00
Cash flows from investing activities
cash payment for acquisition equipment
(28,600.00)
Net cash used in investing activities
(28,600.00)
Cash flows from financing activities
Proceeds from issue of share capital
23,900.00
cash payment of notes payable (23000+23600)
(46,600.00)
Payment of dividend
(63,900.00)
Net cash used in financing activities
(86,600.00)
Net increase in cash and cash equivalents
10,500.00
Cash and cash equivalents at beginning of period
15900
Cash and cash equivalents at end of period
26,400.00