Concept explainers
Statement of cash flows; direct method
• LO21–3, LO21–8
Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.
Additional information from the accounting records:
a. Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2018.
b. During 2018, equipment with a cost of $300,000 (90%
c. The statement of shareholders’ equity reveals reductions of $225,000 and $450,000 for stock dividends and cash dividends, respectively.
Required:
Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. (You may omit the schedule to reconcile net income to cash flows from operating activities.)
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Intermediate Accounting
- Statement of cash flows direct method The comparative balance sheet of Martinez Inc. for December 31, 20Y4 and 20Y3, is as follows: Dec. 31, 20Y4 Dec. 31, 20Y3 Assets Cash 661,920 683,100 Accounts receivable (net) 992,640 914,400 Inventories 1,394,400 1,363,800 Investments 0 432,000 Land 960,000 0 Equipment 1,224,000 984,000 Accumulated depreciationequipment (481,500) (368,400) Total assets 4,751,460 4,008,900 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) 1,080,000 966,600 Accrued expenses payable (operating expenses) 67,800 79,200 Dividends payable 100,800 91,200 Common stock, 5 par 130,000 30,000 Paid in capital: Excess of issue price over parcommon stock 950,000 450,000 Retained earnings 2,422,860 2,391,900 Total liabilities and stockholders' equity 4,751,460 4,008,900 The income Statement for the year ended December 51. 20Y3. is as follows: Sales 4,512,000 Cost of goods sold 2,352,000 Gross profit 2,160,000 Operating expenses: Depredation expense 113,100 Other operating expenses 1,344,840 Total operating expenses 1,457,940 Operating income 702,060 Other income: Gain on sale of investments 156,000 Income before income tax 858,060 Income tax expense 299,100 Net income 558,960 Additional data obtained from an examination of the accounts in the ledger for 20Y3 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.arrow_forwardStatement of cash flowsdirect method The comparative balance sheet of Martinez Inc. for December 31, 20Y4 and 20Y3, is as follows: Dec 31, 20Y4 Dec. 31,20Y3 Assets Cash.................................. 661,920 683,100 Accounts receivable (net).................................. 992,640 0 914,400 Inventories............................................... 1,394,40 1,363,800 Investments.............................................. 0 432,000 Land..................................................... 960,000 0 Equipment................................................ 1,224,000 984,000 Accumulated depreciationequipment.................... (481,500) (368,400) Total assets............................................ 4,751,460 4,008,900 Liabilities and Stockholders' Equity Accounts payable......................................... 1,080,000 966,600 Accrued expenses payable................................ 67,800 79,200 Dividends payable.................................. 100,800 91,200 Common stock. S par .................................... 130,000 30,000 Paid in capital: Excess of issue price over parcommon stock...... 950,000 450,000 Retained earnings......................................... 2,422,860 2,391,900 Total liabilities and stockholders' equity.................. 4,751,460 4,008,900 The income statement for the year ended December 31, 20Y4, is as follows: Sales.......................................... 4,512,000 Cost of merchandise sold....................... 2,352,000 Gross profit.................................... 2,160,000 Operating expenses: Depreciation expense....................... 113,100 Other operating expenses................... 1,344,840 Total operating expenses................. 1,457,940 Operating income.............................. 702,060 Other income: Gain on sale of investments.................. 156,000 Income before income tax...................... 858,060 Income tax expense............................ 299,100 Net income.................................... 558,960 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.arrow_forwardCP 14–8 Assume the following income statement and balance sheet information: Service revenue (all cash) $175 Operating expenses Salaries (all cash)$ 85 Net income $90 2020 2019 Current assets Cash $1,250 $1,600 Short‐term invest. 100 200 $1,350 $1,800 Liabilities Borrowings 600 1,000 Stockholders’ equity Common stock 200 300 Retained earnings 550 500 750 800 $1,350 $1,800 Other information: The short‐term investments are riskless and will be converted to a known amount of cash in 60 days. Borrowings are non‐ current. No gain or loss occurred when common stock was repurchased. Required: Calculate cash flow from operating activities .2.Prepare…arrow_forward
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