The Murdock Corporation reported the following balance sheet data for 2021 and 2020:
2021 2020
Cash $98,465 $34,355
Available-for-sale debt
securities (not cash
equivalents) 25,000 104,000
Accounts receivable 99,000 85,350
Inventory 184,000 162,100
Prepaid insurance 3,210 3,900
Land, buildings, and
equipment 1,288,000 1,144,000
Accumulated depreciation (629,000 ) (591,000 )
Total assets $1,068,675 $942,705
Accounts payable $93,440 $167,670
Salaries payable 27,600 34,000
Notes payable (current) 42,100 94,000
Bonds payable 219,000 0
Common stock 300,000 300,000
Retained earnings 386,535 347,035
Total liabilities and
shareholders' equity $1,068,675 $942,705
Additional information for 2021:
(1) Sold available-for-sale debt securities costing $79,000 for $85,400.
(2) Equipment costing $20,000 with a book value of $6,900 was sold for $8,850.
(3) Issued 6% bonds payable at face value, $219,000.
(4) Purchased new equipment for $164,000 cash.
(5) Paid cash dividends of $29,500.
(6) Net income was $69,000.
Required:
Prepare a statement of cash flows for 2016 in good form using the indirect method for cash flows from operating activities.

Question

12-05-2021
Business

contestada

The Murdock Corporation reported the following balance sheet data for 2021 and 2020:
2021 2020
Cash $98,465 $34,355
Available-for-sale debt
securities (not cash
equivalents) 25,000 104,000
Accounts receivable 99,000 85,350
Inventory 184,000 162,100
Prepaid insurance 3,210 3,900
Land, buildings, and
equipment 1,288,000 1,144,000
Accumulated depreciation (629,000 ) (591,000 )
Total assets $1,068,675 $942,705
Accounts payable $93,440 $167,670
Salaries payable 27,600 34,000
Notes payable (current) 42,100 94,000
Bonds payable 219,000 0
Common stock 300,000 300,000
Retained earnings 386,535 347,035
Total liabilities and
shareholders' equity $1,068,675 $942,705
Additional information for 2021:
(1) Sold available-for-sale debt securities costing $79,000 for $85,400.
(2) Equipment costing $20,000 with a book value of $6,900 was sold for $8,850.
(3) Issued 6% bonds payable at face value, $219,000.
(4) Purchased new equipment for $164,000 cash.
(5) Paid cash dividends of $29,500.
(6) Net income was $69,000.
Required:
Prepare a statement of cash flows for 2016 in good form using the indirect method for cash flows from operating activities.

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anthougo anthougo · Answer 1 · 2021-05-13T04:05:21+02:00

Answer:

The Murdock Corporation

Statement of Cash Flows for the year ended December 31, 2021

Operating activities (only):

Net income $69,000

Depreciation expense 51,100

Gain on sale of securities (6,400)

Gain on sale of equipment (1,950)

Changes in working capital:

Accounts receivable (13,650)

Inventory (21,900)

Prepaid insurance 690

Accounts payable (74,230)

Salaries payable (6,400)

Notes payable (current) (51,900)

Cash flow from operations ($55,640)

Explanation:

a) Data and Calculations:

2021 2020 Change

Cash $98,465 $34,355 +$64,110

Available-for-sale debt securities

(not cash equivalents) 25,000 104,000 -79,000

Accounts receivable 99,000 85,350 +13,650

Inventory 184,000 162,100 +21,900

Prepaid insurance 3,210 3,900 -690

Land, buildings, and

equipment 1,288,000 1,144,000 +144,000

Accumulated depreciation (629,000 ) (591,000 ) +38,000

Total assets $1,068,675 $942,705

Accounts payable $93,440 $167,670 -74,230

Salaries payable 27,600 34,000 -6,400

Notes payable (current) 42,100 94,000 -51,900

Bonds payable 219,000 0 +219,000

Common stock 300,000 300,000 0

Retained earnings 386,535 347,035 +39,500

Total liabilities and

shareholders' equity $1,068,675 $942,705

Additional information for 2021:

1. Available=for-sale debt securities:

Cost = $79,000

Sales = 85,400 Cash

Profit = $6,400

2. Equipment:

Cost = $20,000

Acc. Dep. 13,100

Book value 6,900

Cash sales 8,850

Profit = 1,950

Accumulated Depreciation:

Beginning balance $591,000

Sale of equipment (13,100)

Depreciation expense 51,100

Ending balance 629,000

3. Bonds issue = $219,000

Interest on bonds = 13,140 ($219,000 * 6%)

4. Purchase of new equipment = $164,000

5. Cash dividends = $29,500

6. Net income = $69,000

Statement of Cash Flows for the year ended December 31, 2021

Operating activities:

Net income $69,000

Depreciation expense 51,100

Gain on sale of securities (6,400)

Gain on sale of equipment (1,950)

Changes in working capital:

Accounts receivable (13,650)

Inventory (21,900)

Prepaid insurance 690

Accounts payable (74,230)

Salaries payable (6,400)

Notes payable (current) (51,900)

Cash flow from operations ($55,640)

Investing activities:

Sale of equipment 8,850

Purchase of equipment (164,000)

Available-for-sale debt securities

(not cash equivalents) 85,400

Cash flow from investing ($69,750)

Financing activities:

Issue of bonds 219,000

Dividends (29,500)

Cash from financing $189,500

Net Cash flows $64,110

Reconciliation:

Beginning cash balance $34,355

Net Cash flows $64,110

Ending cash balance $98,465