Question

Acomparative balance sheet for Carson Company appears below: CARSON COMPANY Comparative Balance Sheet Dec. 31,2017 Dec. 31, 2016 Assets Cash Accounts receivable Inventories Equipment Accumulated depreciation-equipment $18,000 25,000 45,000 70,000 (27,000) $131,000 Liabilities and Stockholders' Equity $33,000 14,000 25,000 78,000 (24,000) $126,000 Total assets Accounts payable Income taxes payable Bonds payable Common stock Retained earnings 31,000 24,000 20,000 25,000 31000 $131,000 s 43,000 20,000 10,000 25,000 28,000 Total liabilities and stockholders' equity Additional information: 1. Net income for the year ending December 31, 2017 was $28,000. 3. Cash dividends of $25,000 were declared and paid during 2017. Total depreciation expense for the year was $6,000. During the year, equipment was sold for $12,000 cash. The equipment cost of $15,000 origi accumulated depreciation of $3,000 at the time of sale. Additional equipment was purchased for $7,000 cash 4. 5. 6.

Answer 1

In the Books of CARSON COMPANY Cashflow Statement as at 31st December 2017 using Indirect method: Particulars Cash Flows From Operating Activities: Net Income Adjustment ofNet Income AmountS Amount $ 28,000 Add: Depreciation Expense Changes in Working Capital:- Less:- Increase in Accounts receivable Less:Increase in Inventory Less: Decrease in Accounts Payable Add: Increase in Income tax payable Cashflow from Operating Activities 6,000 (11,000) (20,000) (12,000) 4,000 (5,000) Cash Flows From Investing Activities: Cash Received from sale of Equipment Cash paid for Purchase of Equipment Change in cash due to Investing Activties 12,000 (7,000) 5,000 Cash Flows From Financin Cash received for issue of Bonds Cash paid for Dividends Change in cash due to Financing Net Changes in Cashflow from all activities Cash at the beginning of the year Cash at the end of the year 10,000 (25,000) (15,000) (15,000) 33,000 18,000