Question

The following information (account balances) were taken from Sampson Company's accounting records at January 1, 2018 and December 31, 2018:

Account Titles	01/01/18		12/31/18
Debits
Cash	$ 1,400		$ 2,400
Accounts Receivable (net)	2,800		2,690
Marketable Securities (at cost)	1,700		3,000
Allowance for Change in Value	500		800
Inventories	8,100		7,910
Prepaid Items	1,300		1,710
Investments (long-term)	7,000		5,400
Land	15,000		15,000
Buildings and Equipment	32,000		46,200
Discount on Bonds Payable	—		290
	$69,800		$85,400
Credits
Accumulated Depreciation	$16,000		$16,400
Accounts Payable	3,800		4,150
Income Taxes Payable	2,400		2,504
Wages Payable	1,100		650
Interest Payable	—		400
Note Payable (long-term)	3,500		—
12% Bonds Payable	—		10,000
Deferred Taxes Payable	800		1,196
Convertible Preferred Stock, $100 par	9,000		—
Common Stock, $10 par	14,000		21,500
Additional Paid-in Capital	8,700		13,700
Unrealized Increase in Value of Marketable Securities	500		800
Retained Earnings	10,000		14,100
	$69,800		$85,400

Additional information for the year ending December 31, 2018:

Sales		$ 39,930
Cost of goods sold		(19,890)
Depreciation expense		(2,100)
Wages expense		(11,000)
Other operating expenses		(1,000)
Bond interest expense		(410)
Dividend revenue		820
Gain on sale of investments		700
Loss on sale of equipment		(200)
Income tax expense		(2,050)
Net income		$ 4,800

2. Dividends declared and paid totaled $700 on December 1, 2018.
3. On January 1, 2018, convertible preferred stock that had originally been issued at par value were converted into 500 shares of common stock. The book value method was used to account for the conversion.
4. Long-term nonmarketable investments that cost $1,600 were sold for $2,300.
5. The long-term note payable was paid by issuing 250 shares of common stock at the beginning of the year.
6. Equipment with a cost of $2,000 and a book value of $300 was sold for $100. The company uses one Accumulated Depreciation account for all depreciable assets.
7. Equipment was purchased at a cost of $16,200.
8. The 12% bonds payable were issued on August 31, 2018, at 97. They mature on August 31, 2028. The company uses the straight-line method to amortize the discount.
1. Taxable income was less than pretax accounting income, resulting in a $396 increase in deferred taxes payable.
10. Short-term marketable securities were purchased at a cost of $1,300. The portfolio was increased by $300 to a $3,800 fair value at year-end by adjusting the related allowance account.

Required

Prepare the statement of cash flows using the proper format Use the indirect method

Answer 1

Cash Flow Statement
Indirect Method
Cash Flow from Operating Activities
Net Income		$        4,800.00
Adjustments
Deferred Tax	$         396.00
Loss on sale of equipment	$         200.00
Gain on sale of investments	$       (700.00)
Discount Amortization expenses	$            10.00
Depreciation	$      2,100.00
Dividend Revenue	$       (820.00)
Bond Interest Expense	$         400.00
Changes in Current Assets/ Current Liabilities
Decrease in Accounts Receivable	$         110.00
Increase in Marketable Securities	$   (1,300.00)
Decrease in Inventory	$         190.00
Increase in Prepaid Rent	$       (410.00)
Increase in Accounts Payable	$         350.00
Increase in Interest Payable	$         400.00
Decrease in Wages Payable	$       (450.00)
Increase in Taxes Payable	$         104.00
Total Adjustments		$            580.00
Cash from Operating Activities			$        5,380.00
Cash flow from Investing Activities
Sale of Investment		$        2,300.00
Dividend Revenue		$            820.00
Sale of Equipment		$            100.00
Purchase of Equipment		$    (16,200.00)
Net cash used In investing activities			$    (12,980.00)
Cash flow from Financing Activities
Issue of Bonds		$        9,700.00
Bond Interest		$          (400.00)
Dividend Paid		$          (700.00)
Net cash used in financing activities			$        8,600.00
Increase in Cash			$        1,000.00
Opening Balance of Cash			$        1,400.00
Closing Balance of Cash			$        2,400.00