Question

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.

METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s)
		2018			2017
Assets
Cash	$	540			$	285
Accounts receivable		670				350
Inventory		820				430
Land		600				570
Building		900				900
Less: Accumulated depreciation		(250	)			(220)
Equipment		3,300				3,110
Less: Accumulated depreciation		(481	)			(440	)
Patent		1,600				1,800
	$	7,699			$	6,785
Liabilities
Accounts payable	$	920			$	720
Accrued expenses payable		310				250
Lease liability—land		130				0
Shareholders' Equity
Common stock		3,640				3,500
Paid-in capital—excess of par		550				460
Retained earnings		2,149				1,855
	$	7,699			$	6,785

METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2018 ($ in 000s)
Revenues
Sales revenue	$	3,152
Gain on sale of land		70		$	3,222
Expenses
Cost of goods sold	$	1,120
Depreciation expense—building		30
Depreciation expense—equipment		608
Loss on sale of equipment		25
Amortization of patent		200
Operating expenses		350			2,333
Net income				$	889

Additional information from the accounting records:

1. Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2018.
2. During 2018, equipment with a cost of $630,000 (90% depreciated) was sold.
3. The statement of shareholders' equity reveals reductions of $230,000 and $365,000 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.

METAGROBOLIZE INDUSTRIES Statement of Cash Flows For year ended December 31, 2018 ($ in 000s) Cash flows from operating activities: Cash inflows: From customers $ 2,832 Cash outflows: To suppliers of goods For operating expenses (1,310) (290) $ 1,232 Net cash flows from operating activities Cash flows from investing activities: Purchase of equipment Sale of land (820) 130 X 38 Sale of equipment Net cash flows from investing activities (652) Cash flows from financing activities: Payment on lease liability (20)

Answer 1

Metagrobolize Industries
Statement of cash flow
For the year ended December 31, 2018
( $ in 000)
Cash Flow from Operating Activities
Cash inflow
Cash collected from customer	$2,832.00
Cash Outflow
TO Suppliers of Goods	-$1,310.00
For Operating Expense	-$290.00
Net cash flow from operating activity		$1,232.00
Net Cash Flow from investing Activities
Purchase of equipment	-$820.00
Sale of Land	$190.00
Sale of Equipment	$38.00
Net cash flow from investing activity		-$592.00
Net Cash Flow from Financing Activities
Repayment of lease liability	-$20.00
Dividend paid	-$365.00
Interest paid
Net cash flow from financial activity		-$385.00
Change in cash		$255.00
Add: beginning cash		$285.00
Ending cash		$540.00

Working Note:-

Land
Beginning balance	570000
Add: land on leased (130000+20000 )	150000
Total	720000
Less: ending balance	600000
Cost of land sold	120000
Add: gain on land of sale	70000
Land sold	190000