lass nctivity 9Accounting For Cash Flows ACCT 201 OShaughnes

lass nctivity 9Accounting For Cash Flows ACCT 201 O\'Shaughnessy init Company, a merchandiser, recently completed the 2018 calendar year, For the year, CI) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all I purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company\'s balance sheet and income statement follow: SPIRIT COMPANY Comparative Balance Sheet December 31, 2018 and 2017 2018 2017 Cash s 49,200 $ 73,500 65,830 51,000 276,000 252,500 1,0001,600 159,000 106,500 (40,000) S520,030 $445,100 Accounts receivable Merchandise inventory Prepaid expenses Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, S5 par value aid-in capital in excess of par, common (31,000) $ 58,555 S 112,000 9,000 7,000 65,000 48,500 162,750 150,750 36,000 0 stock Retained earnings Total liabilities and equity 188,725 126,850 S520,030 $445,100 SPIRIT COMPANY Income Statement For Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses $584,000 283,000 301,000 Depreciation expense S 20,000 Other expenses Other gains (losses) 132,400 152,400 5,875 $142,725 24,250 $118,475 Loss on sale of equipment Income before taxes Income taxes expense Net income

Solution

Answer

Calculation of cash Received by Spirit for Equipment Sold
	$
Cost of Equipment	46,500
Less: Loss on sale	(5,875)
Sale Value	40,625
Calculation of Dividend declared and Distributed in 2018
Retained Earnings as on 2017	126,850
Add: Net Income	118,475
Less: Retained Earnings as on 2018	(188,725)
Dividend Declared and Paid	56,600
Calculation of Net cash flows provided or (used) in financing activities
Proceeds from issue of common stock	48,000
Repayment of long term note payable	(47,500)
Net cash flows provided in financing activities	500
Calculation of Net cash flows provided or (used) in investing activities
Sale proceeds from equipment	40,625
Purchase of Equipment	(35,000)
Loss on sale of equipment`	(5,875)
Net cash flows (used) in investing activities	(250)