Concept Check MKH Company Comparative Balance Sheets Use the

Concept Check

MKH Company Comparative Balance Sheets
Use the following comparative balance sheets and additional information to answer questions (1) through (4).

Additional Information for MKH Co. in 20X1:
1. Net income for year 20X1 was $216,000.
2. The company declared and paid a cash dividend of $132,800.
3. The only posting to the net equipment account was for depreciation expense of $35,000 (i.e., no equipment was sold).
4. MKH sold land worth $19,200 for $8,000 cash.
5. The company retired $148,400 worth of bonds payable at the beginning of the year.

1. What was the loss on the sale of land recorded by MKH Company in 20X1?

2. What were MKH Company’s cash flows from (for) operating activities in 20X1?

3. What were MKH Company’s cash flows from (for) investing activities in 20X1?

4. What were MKH Company’s cash flows from (for) financing activities in 20X1?

	$11,200
	$19,200
	$0
	$8,000

MKH Company Comparative Balance Sheets For the year ended December 31 20X0 Change Current assets Cash Accounts receivable Invento Prepaid rent $324,700 132,600 175,100 25,500 657,900 217,600 165,200 137 200 $ 107,100 32,600 37,900 11,100 123,500 14,400 534,400 Total current assets Long-term assets Land Equipment (net 326,400 321 300 647 700 345,600 356,300 701,900 19,200 (35,000 54200 Total long-term assets Total assets Current liabilities Accounts payable Salaries pavable Interest payable 145,800 18,700 32,300 131 200 4,800 27,200 14,600 13,900 5,100 Total current liabilities Long-term liabilities Bonds pavable Stockholders\' equit Common stock 321 400 469,800 (148,400) 535,800 251 600 434,900 168,400 100,900 83,200 Retained earnings

Solution

1. What was the loss on the sale of land recorded by MKH Company in 20X1?

Solution: $11,200

Working: Loss on the sale of land recorded = Sales proceeds - Net book value of asset = $8,000 - $19,200 = $11,200

2. What were MKH Company’s cash flows from (for) operating activities in 20X1?

Solution: $279,400

Working:

Cash flows from operating activities = Net Income + Loss on disposal of land + + Depreciation = $216,000 + $11,200 + $35,000 = $262,200

3. What were MKH Company’s cash flows from (for) investing activities in 20X1? Solution: $8,000

Working: Cash flows from investing activities = Disposal of land = $8,000

4. What were MKH Company’s cash flows from (for) financing activities in 20X1?

Solution: $(180,300)

Working: Cash flows for financing activities = Retired bonds = ($148,400)