Jacoby Corporation a merchandiser recently completed its cal

Jacoby Corporation, a merchandiser, recently completed its calendar year 2016 operations. For the year:

? All sales are credit sales

? All credits to Accounts Receivable reflect cash receipts from customers

? All purchases of inventory are on credit

? All debits to Accounts Payable reflect cash payments for inventory

? Other expenses are paid in advance and are initially debited to Prepaid Expenses.

? The company’s balance sheets and income statement follow.

Additional Information on Year 2011 Transactions

a. The loss on the cash sale of equipment was $2,100 (details in b).

b. Sold equipment costing $51,000, with accumulated depreciation of $20,850, for $28,050 cash.

c. Purchased equipment costing $113,250 by paying $38,250 cash and signing a long-term note

payable for the balance.

d. Borrowed $6,000 cash by signing a short-term note payable.

e. Paid$45,000cashtoreducethelong-termnotespayable.

f. Issued 3,000 shares of common stock for $11 cash per share.

g. Declaredandpaidcashdividendsof$63,000.

SOLUTION:

Cash Flow Statement
Net Income		$57,000
Add
Decrease in Accounts Receivable	$16,650
Decrease in Inventory	$35,700
Decrease in Prepaid Expenses	$2,100
Loss on Sale of Equipment	$2,100
Depreciation Expense	$36,600
Increase in Short Term Notes Payable	$6,000	$99,150
Minus
Decrease in Accounts Payable	-$6,000	-$6,000
Cash Flow provided by Operating Activities (A)		$150,150

Cash Flow from Investing Activities
Add: Sale of Equipment	$28,050
Minus: Purchase of Equipment	-$38,250
Cash Flow used by Investing Activities (B		-$10,200

Cash Flow from Financing Activities
Plus: Proceeds from Issuance of Common Stock	$33,000	$33,000
Minus:
Payment of Cash Dividend	-$63,000
Payment of Long Term Note	-$45,000	-$108,000
Cash Flow used by Financing Activities (C		-$75,000
Increase/Decrease in Cash Equivalents (A+B+C)		$64,950
Opening cash balance		$71,550