The comparative balance sheet of Canace Products Inc. for December 31, 2016 and
ID: 2743584 • Letter: T
Question
The comparative balance sheet of Canace Products Inc. for December 31, 2016 and 2015, is shown as follows: 1 Dec. 31, 2016 Dec. 31, 2015 2 Assets 3 Cash $644,280.00 $679,240.00 4 Accounts receivable (net) 565,860.00 546,830.00 5 Inventories 1,010,590.00 981,810.00 6 Investments 0.00 239,300.00 7 Land 520,730.00 0.00 8 Equipment 880,820.00 680,410.00 9 Accumulated depreciation-equipment (244,970.00) (200,400.00) 10 Total assets $3,377,310.00 $2,927,190.00 11 Liabilities and Stockholders’ Equity 12 Accounts payable (merchandise creditors) $772,460.00 $747,980.00 13 Accrued expenses payable (operating expenses) 63,180.00 70,910.00 14 Dividends payable 8,380.00 6,700.00 15 Common stock, $2 par 56,000.00 32,000.00 16 Paid-in capital: Excess of issue price over par—common stock 408,000.00 192,000.00 17 Retained earnings 2,069,290.00 1,877,600.00 18 Total liabilities and stockholders’ equity $3,377,310.00 $2,927,190.00 The income statement for the year ended December 31, 2016, is as follows: 1 Sales $5,981,880.00 2 Cost of merchandise sold 2,452,690.00 3 Gross profit $3,529,190.00 4 Operating expenses: 5 Depreciation expense $44,570.00 6 Other operating expenses 3,099,960.00 7 Total operating expenses 3,144,530.00 8 Operating income $384,660.00 9 Other expense: 10 Loss on sale of investments (63,420.00) 11 Income before income tax $321,240.00 12 Income tax expense 101,870.00 13 Net income $219,370.00 Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows: A. Equipment and land were acquired for cash. B. There were no disposals of equipment during the year. C. The investments were sold for $175,880 cash D. The common stock was issued for cash. E. There was a $27,680 debit to Retained Earnings for cash dividends declared. Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign only to indicate the net cash outflows for each section. “Deduct”, “Less” or colons (:) will automatically appear if required.
Cash paid for dividendsCash paid for purchase of equipmentCash paid for purchase of landCash paid for purchase of treasury stockCash payments for income taxesCash payments for merchandiseCash payments for operating expensesCash received from customersCash received from sale of common stockCash received from sale of investmentsDecember 31, 2016Decrease in cashDepreciationFor the Year Ended December 31, 2016Gain on sale of investmentsIncrease in cashIssuance of common stock for acquisition of landIssuance of common stock for purchase of equipmentLoss on sale of investmentsNet cash flow from financing activitiesNet cash flow from investing activitiesNet cash flow from operating activitiesNet cash flow used for financing activitiesNet cash flow used for investing activitiesNet cash flow used for operating activities
Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign only to indicate the net cash outflows for each section. “Deduct”, “Less” or colons (:) will automatically appear if required.
Explanation / Answer
STATEMENT OF CASH FLOWS: (DIRECT METHOD) Cash flow from operating activities: Receipts from customers 5962850 Payment for merchandise -2456990 Operating expenses paid -3107690 Income tax paid -101870 Net cash from operating activities 296300 Cash flow from investing activities: Sale of investments 175880 Purchase of land -520730 Purchase of equipment -200410 Net cash used by investing activities -545260 Cash flow from financing activities: Dividend paid -26000 Common stock issued 24000 Addl paid in capital common stock 216000 Net cash from financing activities 214000 Increase in cash and cash equivalents -34960 Beginning balance of cash and cash equivalents 679240 Ending balance of cash and cash equivalents 644280