Question

pDemonstration Problem: Statement of Cash Flows Using the Indirect Method Panda Productions Comparative Balance Sheets As of December 31, 2016 and 2017 2017 2016 Assets: Cash ccounts receivable Prepaid expenses 321,500 $269,000 50,500 9,200 47,000 Land Buildings and equipment Less: Acc. depreciation 300,000300,000 569,000 530,000 Total 1,065,800 29974 Liabilities: ccounts payable Income tax payable Short-term notes payable $32,700 $29000 44,600 8,000 49,000 35,000 32,000 340,000 290,000 payable Bonds payable Shareholders' Equity: Common stock Paid-in capital-excess of par Retained earnings Treasury stock 180,000 180,000 327,000 327,000 136,500 90,000 Total 1,085,800 2997,000 Income Statement For the Year Ended December 31, 2017 Sales revenue $530,000 Cost of goods sold Gross profit $271,500 Operating expenses: 22,200 Depreciation expense Other operating expenses 105.000 (127,200) Other gains (losses) Gain on sale of equipment Income before income taxes Income tas expense 4.700 $149,000 07100 71.200 Net income Additional information from the accounting records: a. A building costing $63,000 was purchased for cash. b. Equipment costing $24,000 with a book value of $16,800 was sold for $21,500 cash. c. Bonds were issued at face value for $50,000 in cash and a short-term note for $8,000. d. At the end of 2017, the company declared a $35,000 cash dividend. Dividends declared in 2016 were paid in cash.

Answer 1

Statement of cash flows Panda Productions Statement of Cash Flows For the Year Ended December 31, 2017 2 Cash flows from operating activities: 3 Net income $71,900 Adjustments to reconcile net income to net cash flows 4 from o 5 Add: Depreciation expense 6 Less: Gain on sale of e 7 Less: Increase in accounts receivable 8 Add: Decrease in prepaid e 9 Add: Increase in accounts payable 10 Less: Decrease in income taxes payable 11 Add: Increase in short-term notes payable 12 Net cash flows from operating activities 13 14 Cash flows from investing activities: 15 Purchase of buildin 16 Sale of e 17 Net cash flows from investing activities 18 19 Cash flows from financing activities: 20 Bonds issued 21 Treasury stock acquired 22 Dividend 23 Net cash flows from financing activities 24 Net increase (decrease in cash 25 Cash balance, be 26 Cash balance, endin activities S22,200 $4,700 $3.500 $800 $3,700 ($4,400) $8,000 ses S94,000 $63,000 21,500 ent $41,500 S50,000 ($18,000) $32,000 S0 S52,500 269.000 S321500

Calculations are shown below: Panda Productions Statement of Cash Flows For the Year Ended December 31, 2017 2 Cash flows from operating activities: 3 Net income 71900 Adjustments to reconcile net income to net cash 4 flows from 5 Add: 6 Less: Gain on sale of e 7 Less: Increase in accounts receivable 8 Add: Decrease in 9 Add: Increase in accounts payable 10 Less: Decrease in income taxes payable 11 Add: Increase in short-term notes payable 12 Net cash flows from operating activities 13 14 Cash flows from investing activities: 15 Purchase of buildin 16 Sale of e 17 Net cash flows from investing activities 18 19 Cash flows from financing activities: 20 Bonds issued 21 Treas 22 Dividend paid 23 Net cash flows from financing activities 24 Net increase (decrease in cash 25 Cash balance, be 26 Cash balance, endin activities: 22200 4700 -47000-50500 10000-9200 -32700-29000 -44600-49000 8000-0 tion expense ent ses SUMB5:B11) -C3+C11 -63000 21500 -B15+B16 50000 -0-18000 stock ac 32000+35000-35000 -C12 C17+C23 269000 -C24+C25