Question

Cashflow Example 2 The following financial financial statements are available for Peacock, Inc. on December 31, 2012. Peacock, Inc. Comparative Balance Sheets As of December 31, 2011 and 2012 Comparative Balance Sheets Assets: Cash AR Inventory Prepaid expense Total current assets 12/31/2011 98,000 240,000 320,000 12/31/2012 158,000 215,000 358,000 12,500 743,500 Change 60,000 (25,000) 38,000 (4,300) 16,800 674,800 Land Property, plant and equipment Accumulated Depn Total Assets 310,000 450,000 (180,000) 1,254,800 250,000 830,000 (200,000) 1,623,500 Liabilities and Shareholders Equity: Accounts payable Wages payable Total current liabilities 98,000 16,700 114,700 90,000 18,900 108,900 (8,000) 2,200 Long-term notes payable Common stock Retained earnings Total Liabilities and Shareholders Equity 445,000 425,000 270,100 1,254,800 315,000 625,000 574,600 1,623,500

Answer 1

WN 1

Beginning plant assets	$    450,000
Add: Purchases	$    450,000
Less: Ending plant assets	$ (830,000)
Cost of assets sold	$       70,000
Beginning Accumulated depreciation	$    180,000
Add: Depreciation for the year	$       64,000
Less: Ending accumulated depreciation	$ (200,000)
Accumulated depreciation for assets sold	$       44,000
Cost of assets sold	$       70,000
Less: Accumulated depreciation	$    (44,000)
Gain on sale	$       12,000
Cash received from sale of plant assets	$       38,000

a)

Peacock Inc
Cash Flow Statement (Indirect Method)
As of December 31, 2012
Cash flows from operating activities
Net Income		$    430,500
Adjustments to reconcile net income:
Depreciation expense	$       64,000
Gain on sale of assets	$    (12,000)
Decrease in accounts receivable	$       25,000
Increase in inventory	$    (38,000)
Decrease in prepaid expense	$         4,300
Decrease in accounts Payable	$       (8,000)
Increase in wages payable	$         2,200
		$       37,500
Net cash provided by operating activities		$    468,000
Cash flows from investing activities
Purchase of Plant assets	$ (450,000)
Sale of land	$       60,000
Sale of plant assets (WN 1)	$       38,000
Net cash used by investing activities		$ (352,000)
Cash flows from financing activities
Dividends paid	$ (126,000)		574600-270100-430500
Cash received from issuance of common stock	$    200,000
Repayment of long term note	$ (130,000)
Net cash used in financing activities		$    (56,000)
Net increase in cash and cash equivalents		$       60,000
Cash and cash equivalents at beginning of period		$       98,000
Cash and cash equivalents at end of period		$    158,000

b)

Peacock Inc
Cash Flow Statement (Direct Method)
As of December 31, 2012
Cash flow from (used) operating activities
Cash received from customers	$    1,905,000		1880000+25000
Cash paid to suppliers	$ (1,146,000)		1100000+8000+38000
Cash paid for wages	$     (125,800)		128000-2200
Cash paid for other expenses	$     (123,200)		127500-4300
Cash paid for interest expense	$        (42,000)
Net cash flow from operating activities		$   468,000

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