The comparative balance sheets for 2016 and 2015 and the statement of income for
ID: 2594488 • Letter: T
Question
The comparative balance sheets for 2016 and 2015 and the statement of income for 2016 are given below for Wright Company. Additional information from Wright's accounting records is provided also.
The common stock of Microsoft Corporation was purchased for $37,000 as a short-term investment not classified as a cash equivalent.
Prepare the statement of cash flows of Wright Company for the year ended December 31, 2016. Present cash flows from operating activities by the direct method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands (i.e., 5,000 should be entered as 5).)
The comparative balance sheets for 2016 and 2015 and the statement of income for 2016 are given below for Wright Company. Additional information from Wright's accounting records is provided also.
Explanation / Answer
WRIGHT COMPANY
CASH FLOW STATEMENTS
For the year ended 2016 - direct method
Particulars
$
$
Cash flows from operating activities
cash receipts from customers
663
Cash payments to customers
-308
Cash Payments to employees
-96
Interest Payments:
-18
Income tax payments
-103
138000
Cash flows from investing activities
Sale of land
24000
Purcahse of short term investment
-37000
Purchase of equipment
-185000
-198000
Cash flows from financing activities
Repayment of notes payable
-37000
sale of common stock
90000
sale of Bonds
74000
Payment of cash dividends
-55000
72000
12000
115000
127000
Working:
$
Cash receipts from customers
Net sales
660
Add: Accounts receivable in the beginning
160
Less: Accounts receivable at the end
-157
663
Cash payments to customers
Purchases
300
Add: Ending inventory
159
Less: Beginning inventory
-155
Add: Beginning Accounts Payable
52
Less: ending Accounts payable
-48
308
Cash Payments to employees
Salaries expense
92
Add: Beginning salaries payable
8
less: Ending salaries payable
-4
96
Interest Payments:
Interest expense
20
Interest payable at the beginning
6
less: int at the end
-8
18
Income tax payments
Income tax expense
98
Income tax at the beginning
14
Income tax at the end
-9
103
WRIGHT COMPANY
CASH FLOW STATEMENTS
For the year ended 2016 - direct method
Particulars
$
$
Cash flows from operating activities
cash receipts from customers
663
Cash payments to customers
-308
Cash Payments to employees
-96
Interest Payments:
-18
Income tax payments
-103
138000
Cash flows from investing activities
Sale of land
24000
Purcahse of short term investment
-37000
Purchase of equipment
-185000
-198000
Cash flows from financing activities
Repayment of notes payable
-37000
sale of common stock
90000
sale of Bonds
74000
Payment of cash dividends
-55000
72000
12000
115000
127000