Question

Riverbed Company had the following information available at the end of 2017. RIVERBEDCOMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31, 2017 AND 2016 2017 2016 Cash $10,090 $4,010 Accounts receivable 12,860 20,500 Short-term investments 22,070 29,870 41,770 Inventory 35,190 Prepaid rent 3,000 11,930 Prepaid insurance 2,080 89 Supplies 1,000 75 Land 174,660 125,380 Buildings 347,010 347,010 Accumulated depreciation-buildings (105,780) (87,050) 402,250 Equipment 524,780 Accumulated depreciation-equipment (130,400) (111,620) Patents 45,280 49,920 $906,780 $869,194 Total assets Accounts payable $21,910 $31,990 Income taxes payable 5,020 4,010 Salaries and wages payable 4,970 2,980 Short-term notes payable 9,980 9,980 Long-term notes payable Bonds payable 69,690 60,350 398,970 398,970 Premium on bonds payable 24,034 16,020 220,910 Common stock 241,860 Paid-in capital in excess of par-common stock 25,190 17,630 Retained earnings 89,000 122,510 $906,780 $869,194 Total liabilities and stockholders' equity RIVERBED COMPANY INCOME STATEMENT AND DIVIDEND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $1,168,880 Cost of goods sold 746,350 422,530 Gross margin Operating expenses Selling expenses $78,940 Administrative expenses 157,380 Depreciation/Amortization expense 42,150 Total operating expenses 278,470 Income from operations 144,060 Other revenues/expenses Gain on sale of land 7,940 Gain on sale of short-term investment 4,030 Dividend revenue 2,380 Interest expense (52,230) (37,880) Income before taxes 106,180 Income tax expense 39,440 Net income 66,740 Dividends to common stockholders (33,230) To retained earnings $33,510

Answer 1

Cash Flow Statement
Direct Method
Cash Flow from Operating Activities
Cash Collected from Customers		$ 1,161,240.00		=1168880+12860-20500
Cash Received for Dividend		$          2,380.00		2380
Cash paid for inventory		$   -763,010.00		=-(746350+31990-21910+41770-35190)
Cash paid for Selling and administrative expenses		$   -228,316.00		=-(157380+78940+2980-4970+3000-11930+2080-89+1000-75)
Cash paid for Interest		$      -60,244.00		=-(52230+8014)
Cash paid for Income tax		$      -38,430.00		=-(39440+4010-5020)
Cash from Operating Activities			$       73,620.00
Cash flow from Investing Activities
Sale of Land		$       57,220.00		=174660-125380+7940
Sale of short term investment		$       11,830.00		=29870-22070+4030
Purchase of Equipment		$   -122,530.00		=402250-524780
Net cash used In investing activities			$     -53,480.00
Cash flow from Financing Activities
Repayment of Notes Payable		$        -9,340.00		=60350-69690
Issue of Common Stock		$       28,510.00		=241860+25190-220910-17630
Dividend Paid		$      -33,230.00		-33230
Net cash used in financing activities			$     -14,060.00
Increase in Cash			$         6,080.00
Opening Balance of Cash			$         4,010.00
Closing Balance of Cash			$       10,090.00

Cash Flow Statement
Indirect Method
Cash Flow from Operating Activities
Net Income		$       66,740.00
Adjustments
Depreciation	$   42,150.00
Gain on sale of land	$    -7,940.00
Gain on sale of short term Investment	$    -4,030.00
Amortization of Premium on Bonds	$    -8,014.00			=16020-24034
Changes in Current Assets/ Current Liabilities
Increase in Accounts Receivable	$    -7,640.00			=12860-20500
Increase in Inventory	$    -6,580.00			=35190-41770
Decrease in prepaid rent	$     8,930.00			=11930-3000
Inrease in prepaid insurance	$    -1,991.00			=89-2080
Increase in Supplies	$       -925.00			=75-1000
Decrease in Accounts Payable	$ -10,080.00			=21910-31990
Increase in Income Tax Payable	$     1,010.00			=5020-4010
Increase in Salaries and Wages Payable	$     1,990.00			=4970-2980
Total Adjustments		$          6,880.00
Cash from Operating Activities			$       73,620.00