Q15E The following data are taken fro... [FREE SOLUTION]

Chapter 23: Q15E (page 1379)

The following data are taken from the records of Alee Company
December 31, December 31,
2017 2016
Cash $ 15,000 $ 8,000
Current assets other than cash 85,000 60,000
Long-term debt investments 10,000 53,000
Plant assets 335,000 215,000
$445,000 $336,000
December 31, December 31,
2017 2016
Accumulated depreciation $ 20,000 $ 40,000
Current liabilities 40,000 22,000
Bonds payable 75,000 鈥�0鈥�
Common stock 254,000 254,000
Retained earnings 56,000 20,000
$445,000 $336,000
Additional information:
1. Held-to-maturity securities carried at a cost of $43,000 on December 31, 2016, were sold in 2017 for $34,000. The loss (not unusual) was incorrectly charged directly to Retained Earnings.
2. Plant assets that cost $50,000 and were 80% depreciated were sold during 2017 for $8,000. The loss was incorrectly charged directly to Retained Earnings.
3. Net income as reported on the income statement for the year was $57,000.
4. Dividends paid amounted to $10,000.
5. Depreciation charged for the year was $20,000.
Instructions
Prepare a statement of cash flows for the year 2017 using the indirect method

Expert verified

As per the statement of cash flow is prepared using the indirect method, net change in cash equals $7,000.

	Amount ($)
Beginning Balance	$215,000
Less: Plant assets sold	50,000
	165,000
Ending plant assets	335,000
Plant assets purchased during the year	$170,000

Alee Company
Statement of cash flows
For the year ended December 31, 2017
Particulars	Amount ($)	Amount ($)

Cash flows from operating activities
Net Income		$46,000
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation expense	20,000
Loss on sale of investments	9,000
Loss on sale of plant assets	2,000
Increase in current assets other than cash	-25,000
Increase in current liabilities	18,000	24,000
Net cash provided by operating activities		70,000

Cash flow from investing activities
Sale of plant assets	8,000
Sale of held-to-maturity investments	34,000
Purchase of plant assets	-170,000
Net cash used by investing activities		-128,000

Cash flow from financing activities
Issuance of bonds payable	75,000
Dividend payment	-10,000
Net cash used by financing activities		65,000
Net Increase in cash		$7,000
Cash, January 1, 2017		8,000
Cash, December 31, 2017		$15,000

Unlock Step-by-Step Solutions & Ace Your Exams!

Over 30 million students worldwide already upgrade their learning with 91影视!

All the tools & learning materials you need for study success - in one app.

Recommended explanations on Business Studies Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

MORTONSON COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2017 (\(000 OMITTED)
Sales revenue		\)3,800
Expenses
Cost of goods sold	\(1,200
Salaries and benefits	725
Heat, light and power	75
Depreciation	80
Property tax	19
Patent amortization	25
Miscellaneous expenses	10
Interest	30	2,164
Income before taxes		1,636
Income tax		818
Net income		818
Retained earnings 鈥� Jan 1, 2017		310
		1,128
Stock dividend declared and issued		600
Retained earnings Dec 31, 2017		\)528

MORTONSON COMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31 (\(000 OMITTED)
Assets	2017	2016
Current assets
Cash	\)333	\(100
U.S treasury notes (available for sale)	10	50
Accounts receivables	780	500
Inventory	720	560
Total current assets	1,843	1,210

Long-term assets
Land	150	70
Building and equipment	910	600
Accumulated depreciation 鈥� building and equipment	(200)	(120)
Patent (less: amortization)	105	130
Total long-term assets	965	680
Total assets	\)2,808	\(1,890

Liabilities and stockholder鈥檚 equity
Current liabilities
Account payable	\)420	\(330
Income tax payable	40	30
Notes payable	320	320
Total current liabilities	780	680
Long-term note payable	200	200
Total liabilities	980	880
Stockholder鈥檚 equity
Common stock	1,300	700
Retained earnings	528	310
Total stockholder鈥檚 equity	1,828	1,010
Total liabilities and stockholder鈥檚 equity	\)2,808	$1,890

1. Payment of accounts payable \(770,000.	4. Collection of note receivable \)100,000.
2. Issuance of common stock \(250,000.	5. Issuance of bonds payable \)510,000.
3. Payment of dividends \(350,000.	6. Purchase of treasury stock \)46,000.