Question

URCES Problem 12-7A (Part Level Submission) Presented below are the financial statements of Wildhorse Company. Wildhorse Company Comparative Balance Sheets Study 2017 2016 Assets Cash Accounts receivable %41,300 23,600 33,040 70,800 (37,760) (28,320) $23,600 16,520 23,600 92,040 Property, plant, and equipment $130,980 $127,440 Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total s 22,420 $17,700 9,440 38,940 16,520 44,840 130,980 $127,440 8,260 20,060 21,240 59,000 Wildhorse Company Income Statement For the Year Ended December 31, 2017 $285,560 206,500 79,060 Sales revenue Cost of goods sold Gross proft Seiling expenses Administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net income $21,240 7,080 28,320 50,740 3,540 47,200 9,440 $37,760 Additional data 1. Depreciation expense was $20,650. 2. Dividends declared and paid were $23,600 3. During the year equipment was sold for $10,030 cash. This equipment cost $21,240 originally and had accumulated depreciation of $11,210 at the time of sale. Y (a) Your answer is partially correct. Try again. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a sign e.g. -15,000 or in parenthesis e.g. (15,000).

Answer 1

Solution

Wildhorse Corporation

Statement of cash flows using the indirect method:

Wildhorse Corporation
Statement of Cash Flows (Indirect Method)
For the Year Ended December 31, 2017
Cash Flows from operating activities:
Net Income		$37,760
adjustments to reconcile net income to net cash flow provided by operating activities
Depreciation expense	20,650
Increase in accounts receivable	($7,080)
Increase in inventory	($9,440)
Increase in accounts payable	$4,720
Decrease in income taxes payable	($1,180)	$7,670
Net Cash provided by operating activities		$45,430
Cash flows from investing activities:
Sale of equipment	$10,030
Net cash provided by investing activities		$10,030
Cash flows from financing activities:
Issuance of common stock	$4,720
dividends paid	($23,600)
Redemption of Bonds	($18,880)
Net Cash used by financing activities		($37,760)
Net increase in cash		$17,700
Cash at beginning of period		$23,600
Cash at end of period		$41,300

Notes:

Sale of equipment involved no gain or loss as shown below,

Cost of equipment = $21,240

Accumulated depreciation = $11,210

Book value = $10,030

Sale value = $10,030

Hence, no gain or loss on sale of equipment.