Question

38. The comparative balance sheet of ConnieJo Company, for December 31, Years I and 2 ended December 31 appears below in condensed form: Year 2 Year 45,000 $53,500 Cash 51,300 Accounts receivable (net) Inventories Investments Equipment Accumulated depreciation-equipment 147,200 135.000 60,000 493,000 375,000 113.700) (128,000) $622800 $553.500 $61,500 $42,600 Accounts payable Bonds payable, due Year 4 Common stock, $10 par Paid-in capital in excess of par-common stock Retained earnings 100,000 250,000 200,000 50,000 236.300 160.900 $622,800 $553,500 The income statement for the current year is as follows: Sales Cost of goods sold Gross profit $623,000 348,500 $274.500 Operating expenses: Depreciation expense Other operating expenses $24,700 75.300 Total operating expenses Income from operations Other income: 100,000 $174,500 Gain on sale of investment S 5,000 Other expense Interest expense Income before income tax Income tax Net incomc 12,000(7000) $167,500 $103.400 Additional data for the current year are as follows: (a) Fully depreciated equipment costing $39,000 was scrapped, no salvage, and (b) (c) (d) (e) equipment was purchased for $157,000 Bonds payable for $100,000 were retired by payment at their face amount. 5,000 shares of common stock were issued at $15 for cash. Cash dividends declared were paid $28,000. All sales are on account. Prepare a statement of cash flows, using the direct method of reporting cash flows from operating activities.

Answer 1

ConnieJo Company
Statement of Cash flows
For the Year Ended December 31, Year 1
Cash flows from operating activities
Cash received from customers	$   629,700		623000+58000-51300
Cash paid to suppliers	$ (341,800)		348500+42600-61500+147200-135000
Cash paid fro operating expense	$   (75,300)
Cash paid for interest	$   (12,000)
Cash paid for income taxes	$   (64,100)
Net cash provided by operating activities		$ 136,500
Cash flows from investing activities
Cash paid for purchase of equipment	$ (157,000)
Cash received from sale of investment	$      65,000		60000+5000
Net cash used by investing activities		$ (92,000)
Cash flows from financing activities
Cash paid to retire bonds	$ (100,000)
Cash received from issuance of common stock	$      75,000		5000*15
Cash dividends paid	$   (28,000)
Net cash used by financing activities		$ (53,000)
Net Decrease in cash and cash equivalents		$    (8,500)
Cash and cash equivalents at beginning of period		$    53,500
Cash and cash equivalents at end of period		$    45,000

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