Question

he comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is as follows: 1 Dec. 31, 2016 Dec. 31, 2015 2 Assets 3 Cash $626,100.00 $585,190.00 4 Accounts receivable (net) 228,630.00 208,060.00 5 Inventories 641,030.00 617,620.00 6 Investments 0.00 239,830.00 7 Land 328,160.00 0.00 8 Equipment 705,110.00 553,850.00 9 Accumulated depreciation-equipment (166,840.00) (147,700.00) 10 Total assets $2,362,190.00 $2,056,850.00 11 Liabilities and Stockholders’ Equity 12 Accounts payable (merchandise creditors) $423,690.00 $404,660.00 13 Accrued expenses payable (operating expenses) 42,340.00 53,240.00 14 Dividends payable 23,050.00 18,680.00 15 Common stock, $2 par 150,000.00 100,000.00 16 Paid-in capital: Excess of issue price over par—common stock 417,500.00 280,000.00 17 Retained earnings 1,305,610.00 1,200,270.00 18 Total liabilities and stockholders’ equity $2,362,190.00 $2,056,850.00 The income statement for the year ended December 31, 2016, is as follows: 1 Sales $5,375,945.00 2 Cost of merchandise sold  3,306,560.00 3 Gross profit $2,069,385.00 4 Operating expenses: 5 Depreciation expense $19,140.00 6 Other operating expenses 1,754,653.00 7 Total operating expenses 1,773,793.00 8 Operating income $295,592.00 9 Other income: 10 Gain on sale of investments 39,470.00 11 Income before income tax $335,062.00 12 Income tax expense 133,022.00 13 Net income $202,040.00 Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows: A. The investments were sold for $279,300 cash. B. Equipment and purchase of land were acquired for cash. C. There were no disposals of equipment during the year. D. The common stock was issued for cash. E. There was a $96,700 debit to Retained Earnings for cash dividends declared. Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign only to indicate the net cash outflows for each section. “Deduct”, “Less” or colons (:) will automatically appear if required. Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign only to indicate the net cash outflows for each section. “Deduct”, “Less” or colons (:) will automatically appear if required. Cromme Inc. Statement of Cash Flows (Label) 1 Cash flows from operating activities: 2 3 4 5 6 7 8 Cash flows from investing activities: 9 10 11 12 13 14 Cash flows from financing activities: 15 16 17 18 19 Cash at the beginning of the year 20 Cash at the end of the year

Answer 1

Statement of cash flow
cash from operating activities
Net income for the year					202,040
Adjustment to reconcile net income to
cash from operating activities
Depreciation expense					19140
Gain on sale of investments					-39470
increase in accounts receivable					-20570
increase in inventories					-23410
increase in accounts payable					19030
Decrease in accrued expenses payable					-10900
Net cash flow from operating activities						145,860
Cash from investing activities
cash from sale of investment					279,300
cash used for purchase of land					-328,160
cash used for purchase of Equipment					-151260
Cash used by investing activities						-200,120
Cash from financing activities
cash from stock issue					187500
cash dividends		(96700+18680-23050)			-92330
Cash from financing activities						95,170
Net increase in cash						40,910
Cash at the beginning						585,190
cash at year end						626,100