Problem 127A Part Level Submission Sheridan Company Comparat

Problem 12-7A (Part Level Submission)

Sheridan Company
Comparative Balance Sheets
December 31

Assets

2017

2016

Cash

$ 77,700

$ 44,400

Accounts receivable

44,400

31,080

Inventory

62,160

44,400

Property, plant, and equipment

133,200

173,160

Accumulated depreciation

(71,040

)

(53,280

)

Total

$246,420

$239,760

Liabilities and Stockholders’ Equity

Accounts payable

$ 42,180

$ 33,300

Income taxes payable

15,540

17,760

Bonds payable

37,740

73,260

Common stock

39,960

31,080

Retained earnings

111,000

84,360

Total

$246,420

$239,760

Sheridan Company
Income Statement
For the Year Ended December 31, 2017

Sales revenue

$537,240

Cost of goods sold

388,500

Gross profit

148,740

Selling expenses

$39,960

Administrative expenses

13,320

53,280

Income from operations

95,460

Interest expense

6,660

Income before income taxes

88,800

Income tax expense

17,760

Net income

$ 71,040

Problem 12-7A (Part Level Submission) Presented below are the financial statements of Sheridan Company. Sheridan Company Comparative Balance Sheets December 31 Assets 2017 2016 Cash $ 77,700 $ 44,400 Accounts receivable 44,400 31,080 Inventory 62,160 44,400 Property, plant, and equipment 133,200 173,160 Accumulated depreciation (71,040 ) (53,280 ) Total $246,420 $239,760 Liabilities and Stockholders’ Equity Accounts payable $ 42,180 $ 33,300 Income taxes payable 15,540 17,760 Bonds payable 37,740 73,260 Common stock 39,960 31,080 Retained earnings 111,000 84,360 Total $246,420 $239,760 Sheridan Company Income Statement For the Year Ended December 31, 2017 Sales revenue $537,240 Cost of goods sold 388,500 Gross profit 148,740 Selling expenses $39,960 Administrative expenses 13,320 53,280 Income from operations 95,460 Interest expense 6,660 Income before income taxes 88,800 Income tax expense 17,760 Net income $ 71,040 Additional data: 1. Depreciation expense was $38,850. 2. Dividends declared and paid were $44,400. 3. During the year equipment was sold for $18,870 cash. This equipment cost $39,960 originally and had accumulated depreciation of $21,090 at the time of sale.

Solution

Sheridan Company Statement of Cash Flows   For the Year Ended December 31, 2017 Cash flows from operating activities Net Income   $   71,040 Adjustments to reconcile net income to : Depreciation expense $   38,850 Increase in accounts receivable $ (13,320) 31080-44400 Increase in inventory $ (17,760) 44400-62160 Increase in accounts payable $      8,880 42180-33300 Decrease in income tax payable $   (2,220) 15540-17760 $   14,430 Net cash provided by operating activities $   85,470 Cash flows from investing activities Cash received from sale of equipment $   18,870 Net cash provided by investing activities $   18,870 Cash flows from financing activities Cash paid as dividend $ (44,400) Repayment of bond $ (35,520) 37740-73260 Cash received from issuance of common stock $      8,880 39960-31080 Net cash used by financing activities $ (71,040) Net Increase in cash and cash equivalents $   33,300 Cash and cash equivalents at beginning of period $   44,400 Cash and cash equivalents at end of period $   77,700