ARDUOUS COMPANY | |||
Statement of Cash Flows | |||
For year ended December 31, 2016 ($ in millions) | |||
Cash flows from operating activities: | |||
Net Income | $71 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Amortization of discount | $5 | ||
Depreciation Expense | $12 | ||
Patent amortization expense | $3 | ||
Loss on machine damage | $20 | ||
Changes in operating assets and liabilities: | |||
Decrease in accounts receivable | $5 | ||
Increase in Investment Revenue Receivables | ($3) | ||
Increase in investment due to equity method income | ($8) | ||
Increase in Inventory | ($6) | ||
Decrease in Prepaid insurance | $3 | ||
Decrease Accounts payable | ($16) | ||
Decrease Salaries payable | ($4) | ||
Increase Bond interest payable | $5 | ||
Decrease Income tax payable | ($7) | ||
Increase Deferred income tax liability | $4 | $13 | |
Net cash flows from operating activities | $84 | ||
Cash flows from investing activities: | |||
Sale of machine components | $16 | ||
Purchase of long-term investment | ($26) | ||
Purchase of land | ($24) | ||
Net cash flows from investing activities | ($34) | ||
Cash flows from financing activities: | |||
Retirement of bonds payable | ($61) | ||
Sale of preferred stock | $76 | ||
Payment of cash dividends | ($19) | ||
Purchase of treasury stock | ($10) | ||
Net cash flows from financing activities | ($14) | ||
Net increase in cash | $36 | ||
Cash balance, January 1 | $82 | ||
Cash balance, December 31 | $118 | ||
Working Notes :- | 2016 | 2015 | Difference |
Assets | |||
Cash | $118 | $82 | $36 |
Accounts receivable | $191 | $196 | ($5) |
Investment revenue receivable | $8 | $5 | $3 |
Inventory | $207 | $201 | $6 |
Prepaid insurance | $6 | $9 | ($3) |
Long-term investment | $160 | $126 | $34 |
Land | $199 | $151 | $48 |
Buildings and equipment | $413 | $402 | $11 |
Less: Accumulated depreciation | ($98) | ($122) | $24 |
Patent | $32 | $35 | ($3) |
$1,236 | $1,085 | ||
Liabilities | |||
Accounts payable | $51 | $67 | ($16) |
Salaries payable | $8 | $12 | ($4) |
Bond interest payable | $10 | $5 | $5 |
Income tax payable | $13 | $20 | ($7) |
Deferred income tax liability | $13 | $9 | $4 |
Notes payable | $24 | $0 | $24 |
Lease liability | $83 | $0 | $83 |
Bonds payable | $216 | $277 | ($61) |
Less: Discount on bonds | ($23) | ($28) | $5 |
Shareholders’ Equity | $0 | $0 | |
Common stock | $435 | $411 | $24 |
Paid-in capital—excess of par | $96 | $86 | $10 |
Preferred stock | $76 | $0 | $76 |
Retained earnings | $244 | $226 | $18 |
Less: Treasury stock | ($10) | $0 | ($10) |
$841 | $723 | ||
Payment of Dividend | |||
Beginning RE | $226 | ||
Add: NI | $71 | ||
Less: Common stock purchased + Paid in capital | ($34) | ||
Ending RE | ($244) | ||
Payment of Dividend | $19 |
The comparative balance sheets for 2016 and 2015 and the income statement for 2016 are given belo...
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