Question

Yoric Company listed the net changes in its balance sheet accounts for the past year as follows:

	Debits > Credits by:		Credits > Debits by:
Cash and cash equivalents	$	103,000
Accounts receivable		171,000
Inventory			$	83,500
Prepaid expenses		5,000
Long-term loans to subsidiaries				105,000
Long-term investments		100,000
Plant and equipment		288,000
Accumulated depreciation				65,100
Accounts payable				49,500
Accrued liabilities		6,000
Income taxes payable				9,300
Bonds payable				407,000
Common stock		123,000
Retained earnings				76,600
	$	796,000	$	796,000

  

The following additional information is available about last year’s activities:

1. Net income for the year was $    ?    .
2. The company sold equipment during the year for $35,100. The equipment originally cost $160,500 and it had $127,100 in accumulated depreciation at the time of sale.
3. Cash dividends of $10,600 were declared and paid during the year.
4. The beginning and ending balances in the Plant and Equipment and Accumulated Depreciation accounts are given below:

	Beginning		Ending
Plant and equipment	$	2,905,000	$	3,193,000
Accumulated depreciation	$	981,900	$	1,047,000

5. The balance in the Cash account at the beginning of the year was $109,100; the balance at the end of the year was $    ?    .
6. If data are not given explaining the change in an account, make the most reasonable assumption as to the cause of the change.

Required:

Using the indirect method, prepare a statement of cash flows for the year.

Answer 1

Statement of cash flow
Cash flow from operating activities		$	$
Net income		87,200
Adjustments:
Depreciation		2,156,000
Profit on sale of equipment		-1700
Increase:
Accounts receivable	-1,71,000
Prepaid expense	-5,000
Accrued Liabilities	-6,000	-1,82,000
Decrease:
Inventory	83,500
Accounts payable	49,500
Income tax payable	9,300	1,42,300
Cash flow from operating activities			2,201,800
Cash flow from investing activities:
Purchase of equipment		-4,48,500
Sale of equipment		35,100
Repayment of loan from subsidiaries		1,05,000
Investment made		-100000
Cash flow from investing activities			-4,08,400
Cash flow from financing activities:
Proceeds of bonds payable		4,07,000
Issuance of common stock		1,23,000
Cash dividend		-10,600
Cash flow from financing activities			5,19,400
Cash flow for the year		a	1,03,000
Beginning cash		b	1,09,100
Ending cash		a+b	2,12,100
Working:
1)
Change in retained earning		76,600
Cash dividend		10,600
Net income		87200
2)
Accumulated depreciation ending	a	10,47,000
Accumulated depreciation beginning	b	9,81,900
Depreciation on remained equipment	c=a-b	20,28,900
Depreciation on sold equipment	d	1,27,100
Depreciation expenses	c+d	21,56,000
3)
Sale proceeds of equipment		35,100
Book value of equipment:
Cost of equipment	1,60,500
Less: Acc. deo	1,27,100	33,400
Profit		1,700
4)
Plant and equipment beginning		29,05,000
Cost of equipment sold		-1,60,500
Balance of plant and equipment	a	27,44,500
Ending balance of plant and equipment	b	31,93,000
Cost of new equipment bought	b-a	4,48,500