Problem 16-3B Calculating cash flows (indirect method) LO5.6 CHECK FIGURE: Cash
ID: 2588064 • Letter: P
Question
Problem 16-3B Calculating cash flows (indirect method) LO5.6 CHECK FIGURE: Cash inflow from operating activities $22,800 Burrow Mining Inc.'s comparative balance sheet information at December 31, 2017, and 2016, and its income statement for the year ended December 31, 2017, are as follows: Burrow Mining Inc. Income Statement Year Ended December 31, 2017 Sales.. Cost of goods sold. Gross profit. Operating expenses.... Depreciation expense...24,080 Profit from Operations. Loss on sale of equipment... Irvestment income Profit before Taxes.... Income taxes. Profit 504,000 336,000 168,000 77,920 102,000 66,000 2,240 6,720 70,480 10,000 60,480 Click here for a description of Table: Problem 16-3B; Income Statement. Burrow Mining Inc. Comparative Balance Sheet Information December 31 Net 2017 2016 Change . 28,000 14,560 $ 13,440 Cash equivalents....10,080 5,600 4,480 Accounts recelvable.51,520 21,840 29,680 Inventory..66,640 48,720 17,920 0 10,080 (10,080) Building and equipment... 25,280 266,000 (6,720) Accumulated depreciation. 68,880 56,560 12,320 Dividends payable 400 800 (400)Explanation / Answer
a. Dividends paid in 2017: $28400
b.
Analysis Component:
The transactions causing a change in the Accounts receivable account are credit sales which will increase the balance in accounts receivable. A decrease in the balance is caused by collections from customers against receivables, sales returns and allowances, sales discounts, and write-off of uncollectible accounts.
Change in the Accounts payable balance is caused by purchase of goods / services on account which will increase the balance and purchase returns and allowances, purchase discounts, and payment of accounts due which will result in a decrease in the balance.
Retained earnings, beginning balance $ 48160 Add: Net income 60480 108640 Less: Retained earnings, ending balance 80640 Dividends declared $ 28000 Dividends payable, beginning balance $ 800 Add: Dividends declared 28000 28800 Less: Dividends payable, ending balance 400 Dividends paid $ 28400