Dec. 31, 20Y4Dec. 31, 20Y3Assets$ 683,100$ 661,920CashAccounts receivable (net)914,400992,640Inventories1,394,4001,363,800Investments432,000Land960,000Equipment....Accumulated depreciation-equipment1,224,000984,000(481,500)(368,400)Total assets$4,751,460$4,008,900Liabilities and Stockholders' Equity$ 966,60079,200Accounts payable ....Accrued expenses payable.Dividends payable.....Common stock, $5 par$1,080,00067,80091,200100,800130,00030,000Paid-in capital: Excess of issue price over par-common stock......Retained earnings......Total liabilities and stockholders' equity.450,000950,0002,422,860$4,751,4602,391,900$4,008,900The income statement for the year ended December 31, 20¥4, is as follows:Sales ......$4,512,000Cost of merchandise soldGross profit ......Operating expenses:Depreciation expenseOther operating expensesTotal operating expenses2,352,000$2,160,000$ 113,1001,344,8401,457,940$ 702,060Operating income..Other income:Gain on sale of investments...156,000$ 858,060Income before income taxIncome tax expense299,100$ 558,960Net income ...

Question
Asked Dec 21, 2019
1 views

The comparative balance sheet of Martinez Inc. for December 31, 20Y4 and 20Y3, is as follows:
Please see  the attachment for details:
Additional data obtained from an examination of the accounts in the ledger for 20Y4 are as follows:
a. Equipment and land were acquired for cash.
b. There were no disposals of equipment during the year.
c. The investments were sold for $588,000 cash.
d. The common stock was issued for cash.
e. There was a $528,000 debit to Retained Earnings for cash dividends declared.

Instructions
Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.

Dec. 31, 20Y4
Dec. 31, 20Y3
Assets
$ 683,100
$ 661,920
Cash
Accounts receivable (net)
914,400
992,640
Inventories
1,394,400
1,363,800
Investments
432,000
Land
960,000
Equipment....
Accumulated depreciation-equipment
1,224,000
984,000
(481,500)
(368,400)
Total assets
$4,751,460
$4,008,900
Liabilities and Stockholders' Equity
$ 966,600
79,200
Accounts payable ....
Accrued expenses payable.
Dividends payable.....
Common stock, $5 par
$1,080,000
67,800
91,200
100,800
130,000
30,000
Paid-in capital: Excess of issue price over par-common stock......
Retained earnings......
Total liabilities and stockholders' equity.
450,000
950,000
2,422,860
$4,751,460
2,391,900
$4,008,900
The income statement for the year ended December 31, 20¥4, is as follows:
Sales ......
$4,512,000
Cost of merchandise sold
Gross profit ......
Operating expenses:
Depreciation expense
Other operating expenses
Total operating expenses
2,352,000
$2,160,000
$ 113,100
1,344,840
1,457,940
$ 702,060
Operating income..
Other income:
Gain on sale of investments...
156,000
$ 858,060
Income before income tax
Income tax expense
299,100
$ 558,960
Net income ...
help_outline

Image Transcriptionclose

Dec. 31, 20Y4 Dec. 31, 20Y3 Assets $ 683,100 $ 661,920 Cash Accounts receivable (net) 914,400 992,640 Inventories 1,394,400 1,363,800 Investments 432,000 Land 960,000 Equipment.... Accumulated depreciation-equipment 1,224,000 984,000 (481,500) (368,400) Total assets $4,751,460 $4,008,900 Liabilities and Stockholders' Equity $ 966,600 79,200 Accounts payable .... Accrued expenses payable. Dividends payable..... Common stock, $5 par $1,080,000 67,800 91,200 100,800 130,000 30,000 Paid-in capital: Excess of issue price over par-common stock...... Retained earnings...... Total liabilities and stockholders' equity. 450,000 950,000 2,422,860 $4,751,460 2,391,900 $4,008,900 The income statement for the year ended December 31, 20¥4, is as follows: Sales ...... $4,512,000 Cost of merchandise sold Gross profit ...... Operating expenses: Depreciation expense Other operating expenses Total operating expenses 2,352,000 $2,160,000 $ 113,100 1,344,840 1,457,940 $ 702,060 Operating income.. Other income: Gain on sale of investments... 156,000 $ 858,060 Income before income tax Income tax expense 299,100 $ 558,960 Net income ...

fullscreen
check_circle

Expert Answer

Step 1

Reconcile the amount of net income with cash flow from operating activities.

help_outline

Image Transcriptionclose

Reconciliation of Net Income with Cash Flows from Operating Activities: $ 558,960 Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Gain on sale of investments Changes in current operating assets and liabilities: 113,100 (156,000) Increase in accounts receivable (78,240) (30,600) Increase in inventories Increase in accounts payable Decrease in accrued expenses payable Net cash flow from operating activities 113,400 (11,400) $ 509,220

fullscreen
Step 2

Calculations:

...
help_outline

Image Transcriptionclose

Calculate the cash flows from operating activities. Sales revenue $4,512,000 Less: Increase in accounts receivable (78,240) Cash receipts from customers $4,433,760 Calculate the cash payments for merchandise. Cost of merchandise sold $2,352,000 Less: Increase in accounts payable (113,400) Add: Increase in inventory 30,600 Cash payments for merchandise $2.269.200 Calculate the cash payment for operating expenses. Operating expenses other than depreciation $1,344,840 Add: Decrease in accrued expenses payable 11.400 Cash payments for operating expenses $1.356.240 Calculate the dividends paid. (Cash dividend declared+Dividend payable 20Y3) Dividends paid= -Dividend payable 20Y4 =S528,000+S91,200 –5100,800 =$518,400

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Cash Flow Statements

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Paul Company uses its periodic inventory system and you are given the following information: Sales.....

A: Calculate cost of goods sold:

question_answer

Q: Journalize the entries to record the following selected bond investment transactions for Starks Prod...

A: a.

question_answer

Q: How does a job-costing system differ from a process-costing system?

A: Job Costing: Job costing is a process of recording the cost on the basis of manufacturing job instea...

question_answer

Q: Three different plans for financing an $18,000,000 corporation are under consideration by its organi...

A: Part 1:

question_answer

Q: Fleeson Company needs additional funds to purchase equipment for a new production facility and is co...

A: Bonds: Bonds are the long-term promissory notes that are represented by a company while borrowing mo...

question_answer

Q: Calculator What is the total stockholders' equity based on the following account balances? $375,000 ...

A: Stockholders’ equity: The claims of owners on a company’s resources, after the liabilities are paid ...

question_answer

Q: Highlight the differences in the closing process when using the periodic inventory system rather tha...

A: Definition:

question_answer

Q: Zeus Investments Inc. is a regional investment company that began operations on January 1, Year 1. T...

A: a. Prepare the journal entry for Year 1

question_answer

Q: On January 1, Valuation Allowance for Available-for-Sale Investments had a zero balance. On December...

A: Available-for-sale securities: These are short-term or long-term investments in debt and equity secu...