CHELSEA CORPORATION Comparative Balance Sheet 2017 2016 Assets Cash $ 38,000 70,
ID: 2572353 • Letter: C
Question
CHELSEA CORPORATION Comparative Balance Sheet 2017 2016 Assets Cash $ 38,000 70,000 25,000 18,000 70,000 (20,000) $31,000 60,000 17,000 40,000 60,000 13 000) $195 000 Accounts receivable (net) Prepaid insurance Land Total Assets Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock Retained earnings $ 13,000 27.000 140,000 21,000 $201.000 S 6,000 19,000 115,000 -55000 Total liabilities and stockholders' equity Additional information 1. Net loss for 2017 is $18,000 2 Cash dividends of $16,000 were declared and paid in 2017 3- Land was sold for cash at a loss of $4,000 This was the only land transaction dunng the year 4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $7,000 cash 5 $22,000 of bonds were retired dung the year at carrying (book) value 6 Equipment was acquired for common stock The fair value of the stock at the time of the exchange was $25,000 Prepare a statement of cash flows for the year ended 2017, using the indirect method Hints: Use T-accounts to find Depreciation expense and for the issuance of Bonds PayableExplanation / Answer
Statement of Cash Flow Particulars Amount Total Amount Income (18,000.00) Loss on sale of land 4,000.00 Depreciation 17,000.00 Gain on sale of equipment = 17000- 15000 (2,000.00) Increase in AR (10,000.00) Increase in prepaid insurance (8,000.00) Increase in AP 7,000.00 Cash flow from operating activities (10,000.00) Cash flow from Investing activities Sale of land = 40000 - 18000 - 4000 18,000.00 Sale of PPE 7,000.00 Cash flow from Investing activities 25,000.00 Cash flow from Financing activities Issue of bonds 30,000.00 retirement of bonds (22,000.00) Dividends Paid = (55000 - 18000) - 21000 (16,000.00) Cash flow from Financing activities (8,000.00) Opening cash and cash equivalents 31,000.00 Closing cash and cash equivalents 38,000.00