Problem 13-9A Condensed financial data of Cheng Inc. follow. Problem 13-9A Conde
ID: 2599369 • Letter: P
Question
Problem 13-9A
Condensed financial data of Cheng Inc. follow.
Problem 13-9A Condensed financial data of Cheng Inc. follow. CHENG INC Comparative Balance Sheets Cash Accounts receivable Inventary Prepaid expenses Investments Equipment Accumulated depreciation-equipment 2015 $99,060 91,370 112,200 28,590 2014 $48,970 33,410 102,570 25,240 242,500 (49,900) (52,210 $678,760$515,470- Total Accounts payable Accrued expenses payable Bonds payable Common stock Retained earnings $111,580 16,340 118,980 220,260 211,600 $578,760 $67,680 17,400 149,170 174,190 106,74O 515,470 Total CHENG INC Income Statement For the Year Ended December 31, 2015 Sales $392,680 Cost of goods sold 135,590 11,890 47,190 26,390 4,130 Operating expenses, excluding depreciation Depreciation expense Incame tax expense Interest expense 5.520 231,210 Loss on disposal of plant asstets Net income 609 Additional information 1. New Equipment costing $84,810 were purchased for cash during the year 2. Old Equipment having an original cost of $57,040 was sold for $1,020 cash. 3. Bonds matured and were paid off at face value for cash. 4. A cash dividend of $56,110 was declared and paid during the year. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow wi either a sian e.q. 15,000 or in parenthesis e.q. (15,000).) CHENG INC Statement of Cash Flows For the Year Fndderl Deecembker 31, 2015 Adjustments to reconcile net income to Question Attempts: 0 of 5 usedSAVE FOR LATER BHIT ANSWERExplanation / Answer
Answer
Details
Net
Cash Flow from Operating Activities
Net Profit before tax
(160,970 + 26,390)
187,360
Add: Non Cash and Non Operating Expenses
Depreciation
47,190
Interest Expense
4,130
Loss on disposal of plant assets
6,520
Operating profit before Working Capital changes
245,200
Add: Increase in Current Liabilities And decrease in Current Assets
Increase in Accounts Payable
43,900
Less: Decrease in Current Liabilities And Increase in Current Assets
Increase in Accounts Receivable
(57,960)
Increase in Inventory
(9,630)
Increase in prepaid expenses
(3,350)
Decrease in Accrues expense payable
(1,060)
Operating profit before Income Tax
217,100
Income Tax Paid
(26,390)
Cash Flow from Operating Activities (A)
190,710
Cash Flow from Investing Activities
Sale of Equipment
1,020
Purchase of equipment
(84,810)
Purchase of investment
(22,180)
Cash Used in Investing Activities (B)
(105,970)
Cash Flow from Financing Activities
Issue of Shares
45,780
Bonds paid
(30,190)
Dividend Paid
(56,110)
Interest Paid
(4,130)
Cash Used in Financing Activities ( C )
(44,650)
Increase in Cash Flow (A+B+C)
40,090
Opening Cash
48,970
Closing Cash
89,060
Equipment A/c
In $
In $
To Bal b/d
242,500
By bank
1,020
By acc depreciation
49,500
To cash
84,810
By P&L
6,520
By Bal c/d
270,270
Total
327,310
Total
327,310
Acc. Depreciation A/c
In $
In $
To Equipment
(Old machinery)
49,500
By Bal b/d
52,210
By P&L
47,190
To bal. b/d
49,900
Total
99,400
Total
99,400
Details
Net
Cash Flow from Operating Activities
Net Profit before tax
(160,970 + 26,390)
187,360
Add: Non Cash and Non Operating Expenses
Depreciation
47,190
Interest Expense
4,130
Loss on disposal of plant assets
6,520
Operating profit before Working Capital changes
245,200
Add: Increase in Current Liabilities And decrease in Current Assets
Increase in Accounts Payable
43,900
Less: Decrease in Current Liabilities And Increase in Current Assets
Increase in Accounts Receivable
(57,960)
Increase in Inventory
(9,630)
Increase in prepaid expenses
(3,350)
Decrease in Accrues expense payable
(1,060)
Operating profit before Income Tax
217,100
Income Tax Paid
(26,390)
Cash Flow from Operating Activities (A)
190,710
Cash Flow from Investing Activities
Sale of Equipment
1,020
Purchase of equipment
(84,810)
Purchase of investment
(22,180)
Cash Used in Investing Activities (B)
(105,970)
Cash Flow from Financing Activities
Issue of Shares
45,780
Bonds paid
(30,190)
Dividend Paid
(56,110)
Interest Paid
(4,130)
Cash Used in Financing Activities ( C )
(44,650)
Increase in Cash Flow (A+B+C)
40,090
Opening Cash
48,970
Closing Cash
89,060