Question

1.

the comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Wright Company. Additional information from Wright's accounting records is provided also.

WRIGHT COMPANY Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s)
	2018				2017
Assets
Cash	$	109			$	70
Accounts receivable		110				115
Short-term investment		52				24
Inventory		115				110
Land		82				100
Buildings and equipment		615				480
Less: Accumulated depreciation		(163	)			(115	)
	$	920				784
Liabilities
Accounts payable	$	35			$	43
Salaries payable		6				8
Interest payable		7				5
Income tax payable		7				11
Notes payable		0				27
Bonds payable		234				180
Shareholders’ Equity
Common stock		355				280
Paid-in capital—excess of par		161				140
Retained earnings		115				90
	$	920			$	784

WRIGHT COMPANY Income Statement For Year Ended December 31, 2018 ($ in 000s)
Revenues:
Sales revenue				$	460
Expenses:
Cost of goods sold	$	210
Salaries expense		67
Depreciation expense		48
Interest expense		17
Loss on sale of land		4
Income tax expense		64			410
Net income				$	50

Additional information from the accounting records:

1. Land that originally cost $18,000 was sold for $14,000.
2. The common stock of Microsoft Corporation was purchased for $28,000 as a short-term investment not classified as a cash equivalent.
3. New equipment was purchased for $135,000 cash.
4. A $27,000 note was paid at maturity on January 1.
5. On January 1, 2018, bonds were sold at their $54,000 face value.
6. Common stock ($75,000 par) was sold for $96,000.
7. Net income was $50,000 and cash dividends of $25,000 were paid to shareholders.

Required:
Prepare the statement of cash flows of Wright Company for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands (i.e., 5,000 should be entered as 5).)

Required: Prepare the statement of cash flows of Wright Company for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands (i.e., 5,000 should be entered as 5).) WRIGHT COMPANY Statement of Cash Flows For year ended December 31, 2018 ($ in 000s) Cash flows from operating activities: Cash inflows: Cash outflows: Net cash flows from operating activities. Cash flows from investing activities:

Answer 1

WRIGHT COMPANY
Statement of Cash flows
For the Year Ended December 31, 2018 ($ in 000s)
Cash flows from operating activities
Cash inflows:
Cash received from customers	$   465		460+115-110
Cash outflows:
Cash paid to suppliers	$ (223)		210+43-35+115-110
Cash paid to employees	$   (69)		67+8-6
Cash paid for interest	$   (15)		17+5-7
Cash paid for income tax	$   (68)		64+11-7
Net cash provided by operating activities		$      90
Cash flows from investing activities
Cash paid for purchase of equipment	$ (135)
Cash paid for purchase of short term investment	$   (28)
Cash received from sale land	$      14
Net cash used by investing activities		$ (149)
Cash flows from financing activities
Dividend payments	$   (25)
Cash paid for repayment of notes	$   (27)
Cash received from issuance of bonds	$      54
Cash received from issue of common stock	$      96
Net cash provided by financing activities		$      98
Net Increase in cash and cash equivalents		$      39
Cash and cash equivalents at beginning of period		$      70
Cash and cash equivalents at end of period		$   109

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