Accountants for Smithson, Inc. have assembled the following data for the year ended

19 May No Comments

Accountants for Smithson, Inc. have assembled the following data for the year ended

December 31, 2016:

Prepare Smithson’s statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and financing activities.

SOLUTION

Cash Flows from Operating Activities:    
Net Income   $ 69,500
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:    
Depreciation Expense $ 25,000  
Gain on Sale of Building (4,000)  
Decrease in Accounts Receivable 6,000  
Increase in Merchandise Inventory (5,000)  
Increase in Accounts Payable 1,900  
Decrease in Income Tax Payable (2,600) 21,300
Net Cash Provided by Operating Activities   90,800
Cash Flows from Investing Activities:    
Acquisition of Equipment for Cash (73,000)  
Cash Receipt from Sale of Building 57,000  
Net Cash Used for Investing Activities   (16,000)
Cash Flows from Financing Activities:    
Cash Receipt from Issuance of Common Stock 42,000  
Cash Receipt from Issuance of Notes Payable 60,000  
Cash Payment of Notes Payable (42,100)  
Cash Payment of Dividends (52,000)  
Net Cash Provided by Financing Activities   7,900
Net Increase (Decrease) in Cash   82,700
Cash Balance, December 31, 2015   20,000
Cash Balance, December 31, 2016   $ 102,700
     
Non-cash Investing and Financing Activities:    
Acquisition of Land by issuing Long-term Notes Payable   $ 118,000
Total Non-cash Investing and Financing Activities   $ 118,000
     



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