Question

The Statement of Cash Flows 215 Problem 14 sed balance sheets of the Spartan Inn are as follows: The condensed bala Spartan Inn Condensed Balance Sheets December 31, 20X1 and 20X2 20X1 Assets Current Assets: 20X2 Cash $ $ Marketable Securities Accounts Receivable Inventory Total Current Assets Investments Property and Equipment: 30,000 50,000 100,000 20,000 200,000 100,000 40,000 50,000 95,000 25,000 210,000 60,000 500,000 5,000,000 1,000,000 (1,600,000) 4,900,000 $5,200,000 500,000 6,000,000 1,100,000 (2,000,000) 5,600,000 $5,870,000 Land Building Equipment Accumulated Depreciation Net Property and Equipment Total Assets Liabilities and Owners' Equity Current Liabilities: Accounts Payable Dividends Payable Current Portion of LTD Total Long-Term Debt Capital Stock Retained Earnings Total Liabilities and Owners' Equity $ 60,000 30,000 100,000 190,000 4,000,000 700,000 310,000 $5,200,000 $ 70,000 50,000 130,000 250,000 4,370,000 700,000 550,000 $5,870,000 Spartan Inn Condensed Income Statement For the year ended December 31, 20X2 $6,000,000 1,000,000 5,000,000 400,000 Other Expenses (except depreciation) 4,500,000 Net Operating Income 100,000 Gain on Sales of Investments 300,000 110,000 Income Taxes $ 290,000 Sales Cost of Sales Gross Profit Depreciation Net Income

Answer 1

SPARTAN INC CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31 20X2
Cash flow from operating activities
Net Income		290000
Adjustment to reconcile net income to cash flow
Depreciation expense	400000
Gain on sale of investment	-300000
Decrease in accounts receivable [100000-95000]	5000
Increase in inventory [20000-25000]	-5000
Increase in accounts payable [70000-60000]	10000
		110000
Net cash flow from operating activity [A]		400000
Cash flow from investing activities
Sales of investment [a]	340000
Purchase of building [ 6000000-5000000]	-1000000
Purchase of equipment [1100000-1000000]	-100000
Net cash flow from Investing activity [B]		- 760000
Cash flow from financing activity
Proceeds from long term debt(b)	400000
Dividend paid (c)	-30000
Net cash flow from financing activity [C]		370000
Net increase /(decrease )in cash during the year [A+B+C]		10000
Cash at beginning		30000
Cash at end		40000

Note:

a)Cost of investment sold = Beginning value -ending value

                               = 100000-60000

                                = 40000

sale value of investment =cost+ gain on sale

                      = 40000+300000

                      = 340000

b)Proceeds from Debt:

Current portion : 130000-100000=30000

Long term :4370000-4000000=370000

Total :400000

c)Dividend paid = Dividend payable at beginning +declared- dividend payable at end

                   = 30000 +50000 -50000

                    = 0