Question

CHAPTER 12 CHECKPOINT PROBLEM #2 Wilma Company had the following information available at the end of 2018: Income Statement For Year Ended December 31, 2018 Sales 441,000 Cost of Goods Sold 205,200 Gross Profit 235,800 Operating Expenses: Depreciation 14,800 Salaries 79,400 Insurance 10,300 Utilities 11,900 Total Operating Expenses 116.400 Operating Income 119,400 Other Expenses/Losses: Gain on Sale of Equipment 4,500 Interest Expense 6.400 (1.900) Income Before Taxes 117,500 Income Tax Expense 19,900 Net Income 97,600 The following additional information is available: a. Investments costing $38,000 were purchased for cash. b. Equipment costing $20,000 with accumualted depreciation of $2,300 was sold for $22,200 cash. c. Equipment costing $90,000 was purchased--S60,000 cash was paid and a $30,000 long-term promissory note was signed for the balance due. d. A cash dividend of $45,000 was declared and paid to shareholders during the year. e. $1,000 of the long-tem note payable was paid. f. 5,000 shares of S1-par value common stock were issued for S3 per share cash. g. Land costing $24.700 was sold for $24,700 cash. REQUIRED: A Complete a set of cash flow T-accounts using the indirect method of computing cash flows from operations. B. Compute the following amounts: Cash Flow from Operating Activities Cash Flow from Investing Activities Cash Flow from Financing Activities Net Increase (or Decrease) in Cash (Note, the net increase or decrease in cash should be the summation of your operating, investing, and financing activities, but it should also be the difference between the ending and beginning balances of your Cash account.) C. Complete a set of cash flow T-accounts using the direct method of computing cash flows from operations. D. Compute the following amounts: Cash Flow from Operating Activities Cash Flow from Investing Activities Cash Flow from Financing Activities

Answer 1

Wilma Company

Cash Flow Statement

a.	Cash Flow from Operating Activities
	Net Profit Earned for the Year	$    97,600.00
	Depreciation Expenses	$    14,800.00
	Gain on sale of Equipment	$    (4,500.00)
	Interest Expense	$      6,400.00
	Income Tax Paid	$ (19,900.00)
	Cash Flow from Operating Activities	$    94,400.00
b.	Cash Flow from Investing Activities
	Purchase of Equipments	$ (38,000.00)
	Proceeds from Sale of Equipments	$    22,200.00
	Purchase of Equipments	$ (60,000.00)
	Proceeds from Sale of Land	$    24,700.00
	Cash Flow from Investing Activities	$ (51,100.00)
c.	Cash Flow from Financing Activities
	Dividend Paid	$ (45,000.00)
	Long Term Notes Paid	$    (1,000.00)
	Common Stock Issued	$    15,000.00
	Interest Expenses	$    (6,400.00)
	Cash Flow from Financing Activities	$ (37,400.00)
	Net Increase / ( Decrease ) in Cash ( a+b+c)	$      5,900.00