Question

Presented below are the financial statements of Sheridan Company. Sheridan Company Comparative Balance Sheets December 31 Assets 2022 2021 Cash $ 52,500 $30,000 21,000 Accounts receivable 30,000 Inventory 42,000 30,000 Property, plant, and equipment Accumulated depreciation 90,000 (48,000) $166,500 117,000 (36,000) $162,000 Total Liabilities and Stockholders' Equity Accounts payable $ 28,500 Income taxes payable 10,500 $ 22,500 12,000 49,500 21,000 Bonds payable 25,500 Common stock 27,000 Retained earnings 75,000 57,000 Total $166,500 $162,000 Sheridan Company Income Statement For the Year Ended December 31, 2022 Sales revenue $363,000 Cost of goods sold 262,500 Gross profit 100,500 Selling expenses $27,000 Administrative expenses 9,000 36,000 Income from operations 64,500 Interest expense 4,500

Answer 1

Statement of Cash Flows
For the Year Ended December 31, 2022
Cash Flows from Operating Activities:
Net income		48000
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	26250
Increase in Accounts Receivable	-9000
Increase in inventory	-12000
Increase in accounts payable	6000
Decrease in Income taxes payable	-1500
		9750
Net cash provided by operating activities		57750
Cash Flows from Investing Activities:
Sale of Equipment		12750
Cash Flows from Financing Activities
Payment of Cash Dividends	-30000
Redemption of Bonds Payable	-24000
Issuance of Common Stock	6000
Net Cash Used by Financing Activities		-48000
Net Increase in Cash		22500
Cash at Beginning of Period		30000
Cash at End of Period		52500
2
Net cash provided by operating activities	57750
Less: Payment of Cash Dividends	-30000
Free cash flow	27750