Question

The comparative balance sheets for Spicer Company as of December 31 are presented below Spicer Company Comparative Balance Sheets December 31 Assets Cash Accounts receivable Inventory Prepaid expenses Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Total 2017 2016 $ 45,000 58,000 142,000 21,000 130,000 200,000 (40,000 ) 155,000 68,000 50,000 151,450 15,280 145,000 200,000 (60,000) 225,000 (45,000) (35,000) $749,730 $676,000 Liabilities and Stockholders Equity Accounts payable Bonds payable Common stock, $1 par Retained earnings Total $ 36,000 300,000 160,000 180,000 $749,730 $676,000 $ 44,730 300,000 200,000 205,000 Additional information: 1. Operating expenses include depreciation expense of $42,000 2. Land was sold for cash at book value 3. Cash dividends of $12,000 were paid 4. Net income for 2017 was $37,000 5. Equipment was purchased for $92,000 cash. In addition, equipment costing $22,000 with a book value of $10,000 was sold for $8,000 cash 6. 40,000 shares of $1 par value common stock were issued in exchange for land with a fair value of $40,000

Answer 1

Spicer Company
Cash Flow Statement
For year ended 31st December 2017
A. Cash Flows from Operating Activity
Net Income		$         37,000.00
Adjustments to reconcile net income to
net cash flow from operating activities:
Depreciation expense	$        42,000.00
Loss on sale of Equipment	$         2,000.00
Changes in current operating assets and liabilities:
Decrease in Accounts receivables	$          8,000.00
Increase in Inventory	$        (9,450.00)
Increase in accounts payables	$          8,730.00
Decrease in prepaid expenses	$          5,720.00
		$         57,000.00
Net cash flow from Operating activities		$         94,000.00
B. Cash flows from Investing Activities
Purchase of Equipment	$     (92,000.00)
Sale of Land	$        25,000.00
Sale of Equipment	$          8,000.00
Net cash flow used for investing activities		$      (59,000.00)
C. Cash Flows from Financing activities
Cash paid for dividends	$     (12,000.00)
Cash flows from Financing activities		$      (12,000.00)
Net Increase (Decrease) in Cash [A+B+C]		$         23,000.00
Cash at the beginning		$         45,000.00
Cash at the end		$         68,000.00

Issue of cash and Purchase of Land in exchange for common stock will not become part of cash flow as both activities are non cash activities.