Question 1 Your answer is partially correct Try aga Stellar

Question 1 Your answer is partially correct. Try aga Stellar Inc., a greeting card company, had the following statements prepared as of December 31, STELLAR INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 12/31 Cash Accounts receivable Short-term debt investments (available-for-sale) Inventory Prepaid rent 17 12/31/16 $6,100 1,600 51,so0 34,900 9.900 0,40D 5,000 4,10 $7,000 18,100 154,100 (25,000) 130,30D (24,900 Copyrights 45,500 50,5OD Total assets $312100 297,000 Accounts payable Income taxes payable Salaries and wages payable Short-term loans payable Long-term loans peyable Cemmon stock, $10 par Contributed capital, common stock Retained earnings Total liabiities & stockholders\' equity $45800 $39,90D 4,000 6,000 4,000 7.900 10,000 60,500 69.3o0 100,000 200,0OD 30,000 30,000 5,800 7,8OD 312,100 297,000 8.100 STELLAR INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017 333,000 174,000 Cost of goods sold Gross profht Operating expenses Operating income Interest expense Gain on sale of equipment Inceme before tax Income tax expense 119,SD0 39,500 11,500 2,050 9,500 30,000 6,O00 $24,O00 Additional information: Dividends in the amount of $6,000 were declared and paid during 2017 2 Depreciation expense and amortization expense are included in operating expenses 3. No unrealized gains or losses have occurred on the investments during the year. Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2017

Solution

Stellar Inc Statement of Cash Flows (Direct Method) For the Year ended Dec 31, 2017 Cash Flow From opearting Activities Cash recd from Cutomers     322,900.00 Cash Payment to Suppliers    (147,600.00) Cash Payment for Operating Expenses      (87,130.00) Cash Payment for Interest      (11,500.00) Cash Payments for Income Tax        (8,000.00) (254,230.00) Net Cash provided by Operating Activities        68,670.00 Cash flow from Investing Activities Purchase of Equipment.      (43,900.00) Sale of Equipment           8,030.00 Purchase of Available for Sale Investments      (16,800.00) Net Cash used by Investing activities     (52,670.00) Cash Flow from Financing Activities Principal Payment on Short Term Loan        (2,100.00) Principal Payment on Long Term Loan        (8,800.00) Dividend Payments        (6,000.00) Net Cash used by Financing Activities     (16,900.00) Net Decrease in Cash           (900.00) Cash at beginning of period          7,000.00 Cash at end of period          6,100.00 Calculation of Cash Recd. From Customers Sales Revenue        333,000.00 Add: Op. Accounts Receivables - Dec 31, 2016          51,500.00 Total Due to Customers        384,500.00 Less: Cls. Accounts Receivable - Dec 31, 2017        (61,600.00) Cash recd from Customers        322,900.00 Calculation of cash Paid to Suppliers Cost of Goods Sold        174,000.00 Add: Closing Inventory as on Dec 31,2017                39,900 Balance              213,900 Less: opening Inventory - Dec 31, 2016              (60,400) Purchases made during the year              153,500 Add: Opening Accounts Payable - Dec 31, 2016                39,900 Total amount Due              193,400 Less: Closing Accounts Payable - Dec 31, 2017              (45,800) Cash Payment to Suppliers              147,600 Calculation of Cash paid for Opearting Exp Operating Exp.        119,500.00 Less: Dep. On Plant & Equipment        (24,170.00) Less: Amortization of copyrights          (5,000.00) Balance          90,330.00 Add: Salaries & Wages Payable - Dec 31, 2016                  4,000 Add: Prepaid Rent - Dec 31, 2017                  5,000 Total Expenses Due                99,330 Less: Salaries & Wages Payable - Dec 31, 2017                (8,100) Less: Prepaid Rent - Dec 31, 2016                (4,100) Cash Payment for Operating Expenses                87,130 Calculation of Cash paid for Income Tax Income Tax Expenses            6,000.00 Add: Tax Payable - Dec 31, 2016            6,000.00 Balance          12,000.00 Less: Tax Payable - Dec 31, 2017          (4,000.00) Cash paid for Income Tax            8,000.00 Calculation of Cash paid for Interest Interest Expenses          63,400.00 Add: Tax Payable - Dec 31, 2015          20,000.00 Balance          83,400.00 Less: Tax Payable - Dec 31, 2016        (17,600.00) Cash paid for Income Tax          65,800.00