Question

Brief Exercise 4-32 - Prepare a worksheet for Evans Company.

Required: Compute operating cash flows using the direct method Brief Exercise 14-32 Worksheet Approach During 20X2, Evans Company had the following transactions: a. Cash dividends of $6,000 were paid. b Equipenent was sold for $2.880, It had an original cost of $10.800 and a book value of s5.400. The loss is included in operating expenses c. Land with a fair market value of $15,000 was acquired by issuing common stock with a par value of $3,600, d. One thousand shares of preferred stock (no par) were sold for $4.20 per share. Evans provided the following income statemene (for 20X2) and comparative balance sheets: Sales $147600 Cost of goods sold (90,000) s 57,600 (39600) $ 18,000 Geuss margin Operating expenses Net income Evans Company Comparative Balance Sheets At December 31, 20X1 and 20x2 20X1 20X2 Assets S 32.400 s 66600 Cash Accounts receivables Inventory Plant and equipmene Accumulated depreciation Land 19,800 22.080 28.800 19,800 46800 36,000 (23,400) 9.000 (21,600) 24,000 Total assets Liabilities and stockholders' equity Accounts payable Wages payable Bonds payable Preferred stock (no par) $113400 $146,880 S 14.400 $ 21.600 1,800 1,080 10,800 6,600 1,800 6,000 21.600 Common stock 18,000 Paid-in capital in excess of par Retained earmings Toeal liabilities and stockholders equity 18,000 29,400 48,600 60,600 $113,400 $146.880 Required: Company. Prepare a worksheet for Evans

Answer 1

Evans Company
Cash Flow Statement
For the year ended Dec 31, 20X2
Operating Activities(Direct method)
Cash Receipts from Customers:
Net sales	147600
Add: Beginning a/cs. Recivables	19800
Less: Ending A/cs. receivables	-22080	145320
Cash Payments to Suppliers :
Purchases(90000-3600 depn.)	86400
Add: Ending Inventory	19800
Less: Beginning Inventory	-28800
Add: Beginning A/cs. Payable	14400
Less: Ending A/cs. Payable	-21600	-70200
Cash Payments to Employees:
Beginning wages payable	1800
Less: Ending wages payable	-1080	-720
Cash payment for operating expenses(39600- loss 2520 )		-37080
Cash generated from operations		37320
Investing activities:
Sale of equipment	2880
Cash generated from investing activities		2880
Financing activities:
Retirement of bonds(10800-6600)	-4200
Cash dividends paid	-6000
Issue/Sale of preferred stock(1000*4.20)	4200
Cash generated from Financing activities		-6000
Net cash generated		34200
Beginning cash balance		32400
Ending cash balance		66600

Operating Activities (Indirect method)
Net Income		18000
Add: Non cash item:Depn.(5400+21600-23400)		3600
Add: Loss on sale of Eqp.(5400-2880)		2520
Adj. net income		24120
Changes to NWC
Less: Inc.In A/R(22080-19800)	-2280
Add: Dec.in Inventory(28800-19800)	9000
Add: Inc.in A/P(21600-14400)	7200
Less: Dec,in Wages payable(1800-1080)	-720
Net Changes to NWC		13200
Cash generated from operations		37320