Problem 127A Part Level Submission Presented below are the f

Problem 12-7A (Part Level Submission)

Presented below are the financial statements of Splish Brothers Company.

Splish Brothers Company
Comparative Balance Sheets
December 31

Assets

2017

2016

$ 75,950

$ 43,400

43,400

30,380

60,760

43,400

130,200

169,260

(69,440

)

(52,080

)

$240,870

$234,360

Liabilities and Stockholders’ Equity

$ 41,230

$ 32,550

15,190

17,360

36,890

71,610

39,060

30,380

108,500

82,460

$240,870

$234,360

Splish Brothers Company
Income Statement
For the Year Ended December 31, 2017

$525,140

379,750

145,390

$39,060

13,020

52,080

93,310

6,510

86,800

17,360

$ 69,440

Additional data:

During the year equipment was sold for $18,445 cash. This equipment cost $39,060 originally and had accumulated depreciation of $20,615 at the time of sale.

  

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Adjustments to reconcile net income to

Splish Brothers Company Comparative Balance Sheets December 31
Assets		2017			2016
Cash		$ 75,950			$ 43,400
Accounts receivable		43,400			30,380
Inventory		60,760			43,400
Property, plant, and equipment		130,200			169,260
Accumulated depreciation		(69,440	)		(52,080	)
Total		$240,870			$234,360
Liabilities and Stockholders’ Equity
Accounts payable		$ 41,230			$ 32,550
Income taxes payable		15,190			17,360
Bonds payable		36,890			71,610
Common stock		39,060			30,380
Retained earnings		108,500			82,460
Total		$240,870			$234,360

Solution

Answers

Assets

2017

2016

Increase (Decrease)

[A]

[B]

[ A – B]

Cash

$                                         75,950.00

$                     43,400.00

$            32,550.00

Accounts receivable

$                                         43,400.00

$                     30,380.00

$            13,020.00

Inventory

$                                         60,760.00

$                     43,400.00

$            17,360.00

Property, plant, and equipment

$                                     1,30,200.00

$                 1,69,260.00

$          (39,060.00)

Accumulated depreciation

$                                       (69,440.00)

$                  (52,080.00)

$          (17,360.00)

Total

$                                     2,40,870.00

$                 2,34,360.00

$              6,510.00

Liabilities and Stockholders’ Equity

2017

2016

Increase (Decrease)

[A]

[B]

[ A – B]

Accounts payable

$                                         41,230.00

$                     32,550.00

$              8,680.00

Income taxes payable

$                                         15,190.00

$                     17,360.00

$            (2,170.00)

Bonds payable

$                                         36,890.00

$                     71,610.00

$          (34,720.00)

Common stock

$                                         39,060.00

$                     30,380.00

$              8,680.00

Retained earnings

$                                     1,08,500.00

$                     82,460.00

$            26,040.00

Total

$                                     2,40,870.00

$                 2,34,360.00

$              6,510.00

Property, plant, and equipment - Beginning Balance

$       1,69,260.00

Equipment sold for

$        (18,445.00)

Accumulated Depreciation on sold equipment

$        (20,615.00)

Ending balance (matching with balance provided)

$       1,30,200.00

Accumulated Depreciation Beginning balance

$          52,080.00

Depreciation expense for the year

$          37,975.00

Accumulated Depreciation on sold equipment

$        (20,615.00)

Ending balance

$          69,440.00

For the year ended 31 Dec 2017

Cash Flow from Operating Activities

Net Income

$                      69,440.00

Adjustments to reconcile Net Income to

Cash flows from operating Activities

Depreciation expense

$                  37,975.00

Increase in Accounts receivables

$                (13,020.00)

Increase In Inventory

$                (17,360.00)

Increase in Accounts Payable

$                     8,680.00

Decrease in Income tax payable

$                  (2,170.00)

$                      14,105.00

Net Cash provided by Operating activities (A)

$                      83,545.00

Cash Flows from Investing Activities

Sale of Equipment

$                  18,445.00

Net cash provided by Investing Activities (B)

$                      18,445.00

Cash Flows from Financing Activities

Redemptions of Bonds

$                (34,720.00)

Issuance of Common Stock

$                     8,680.00

Dividends paid

$                (43,400.00)

Net cash used by Financing activities (C )

$                    (69,440.00)

Net Increase in Cash (A+B+C)

$                      32,550.00

Cash at the beginning of the period

$                      43,400.00

Cash at the end of the period

$                      75,950.00

Assets	2017	2016	Increase (Decrease)
	[A]	[B]	[ A – B]
Cash	$                                         75,950.00	$                     43,400.00	$            32,550.00
Accounts receivable	$                                         43,400.00	$                     30,380.00	$            13,020.00
Inventory	$                                         60,760.00	$                     43,400.00	$            17,360.00
Property, plant, and equipment	$                                     1,30,200.00	$                 1,69,260.00	$          (39,060.00)
Accumulated depreciation	$                                       (69,440.00)	$                  (52,080.00)	$          (17,360.00)
Total	$                                     2,40,870.00	$                 2,34,360.00	$              6,510.00
Liabilities and Stockholders’ Equity	2017	2016	Increase (Decrease)
	[A]	[B]	[ A – B]
Accounts payable	$                                         41,230.00	$                     32,550.00	$              8,680.00
Income taxes payable	$                                         15,190.00	$                     17,360.00	$            (2,170.00)
Bonds payable	$                                         36,890.00	$                     71,610.00	$          (34,720.00)
Common stock	$                                         39,060.00	$                     30,380.00	$              8,680.00
Retained earnings	$                                     1,08,500.00	$                     82,460.00	$            26,040.00
Total	$                                     2,40,870.00	$                 2,34,360.00	$              6,510.00