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Condensed financial data of Granger Inc. follow.
Granger Inc.
Comparative Balance Sheets
December 31
Assets 2017 2016
Cash $ 80,800 $ 48,400
Accounts receivable 87,800 38,000
Inventory 112,500 102,850
Prepaid expenses 28,400 26,000
Long-term investments 138,000 109,000
Plant assets 285,000 242,500
Accumulated depreciation (50,000) (52,000)
Total $682,500 $514,750
Liabilities and Stockholders' Equity
Accounts payable $ 102,000 $ 67,300
Accrued expenses payable 16,500 21,000
Bonds payable 110,000 146,000
Common stock 220,000 175,000
Retained earnings 234,000 105,450
Total $682,500 $514,750
Granger Inc.
Income Statement Data
For the Year Ended December 31, 2017
Sales revenue $ 388,460
Less:
Cost of goods sold $ 135,460
Operating expenses, excluding depreciation 12,410
Depreciation expense 46,500
Income tax expense 27,280
Interest expense 4,730
Loss on disposal of plant assets 7,500 233,880
Net income $ 154,580
Additional information:
1.New plant assets costing $100,000 were purchased for cash during the year.
2.Old plant assets having an original cost of $57,500 and accumulated depreciation of $48,500 were sold for $1,500 cash.
3.Bonds payable matured and were paid off at face value for cash.
4.A cash dividend of $26,030 was declared and paid during the year. Further analysis reveals that accounts payable pertain to merchandise creditors.
Prepare a statement of cash flows for Granger Inc. using the direct method. (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Sagot :

Zviko

Answer:

Granger Inc

Statement of cash flows for the year ended December 31 2017

Cashflow from Operating Activities

Cash Received from customers                                                 $338,660

Cash Paid to Suppliers and Employees                                   ($129,720)

Cash Generated from Operations                                             $208,940

Interest expense paid                                                                   ($4,730)

Income tax expense paid                                                           ($27,280)

Net Cash from Operating Activities                                            $176,930

Cashflow from Investing Activities

Purchases of New Plant                                                           ($100,000)

Proceeds from Sale of Old Plants                                                 $1,500

Purchases of Long term investments                                       ($29,000)

Net Cash from Investing Activities                                           ($127,500)

Cashflow from Financing Activities

Repayments of Bonds                                                               ($36,000)

Cash Dividends                                                                          ($26,030)

Issue of Shares                                                                            $45,000

Net Cash from Financing Activities                                            ($17,000)

Movement in Cash and Cash Equivalent                                $32,400

Cash and Cash Equivalents at the Beginning of the year    $48,400

Cash and Cash Equivalents at the End of the year               $80,800

Explanation:

Working 1

Cash Paid to Suppliers and Employees calculation :

Cost of goods sold                                                    $135,460

Add Operating Expenses                                            $12,410

                                                                                   $147,870

Adjustment of Working Capital items :

Increase in Inventory                                                   $9,650

Increase in Prepaid expenses                                     $2,400

Increase in Accounts payable                                  ($34,700)

Decrease in Accrued expenses payable                   $4,500

Cash Paid to Suppliers and Employees                   $129,720

Working 2

Cash Received from Customers :

Sales revenue                                                           $388,460

Less Increase in Accounts receivable                     ($49,800)

Cash Received from customers                              $338,660

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