Question

Problem 17-9A Your answer is partially correct. Try again. Condensed financial data of Cheng Inc. follow. CHENG INC. Comparative Balance Sheets December 31 Assets 2017 Cash $105,400 Accounts receivable 91,000 Inventory 111,400 Prepaid expenses 29,700 Investments 139,800 Equipment 264,500 Accumulated depreciation-equipment (46,900) Total $694,900 2016 $48.900 33,700 101,900 25,100 114,100 241,200 (51,600) $513,300 Liabilities and Stockholders' Equity Accounts payable Accrued expenses payable Bonds payable Common stock Retained earnings Total $111,400 16,400 119,400 220,100 227,600 $694,900 $67,300 17,300 150,000 175,300 103,400 $513,300 $392,600 CHENG INC. Income Statement For the Year Ended December 31, 2017 Sales revenue Less: Cost of goods sold $135,400 Operating expenses, excluding depreciation 12,500 Depreciation expense 31,500 Income tax expense 27,900 Interest expense 4,400 Loss on disposal of plant assets 7,500 Net income 219,200 $173,400 Additional information: 1. New equipment costing $79,900 were purchased for cash during the year. 2. Old equipment having an original cost of $56,600 was sold for $12,900 cash. 3. Bonds matured and were paid off at face value for cash. 4. A cash dividend of $49,200 was declared and paid during the year. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

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Answer 1

Statement of Cash Flows (Indirect Method) Cash flow from Operating Activities: Net Income 173400 Adjustments to reconcile net income to Net Cash provided by Operating Activities Depreciation Expense Loss on Disposal of Plant Assets Increase in Accounts Receivable Increase in Prepaid Expenses Increase in Inventory Increase in Accounts payable Decrease in Accrued Expenses payable 31500 7500 -57300 -4600 -9500 44100 -900 108001 184200 Net Cash provided by Operating activities Cash flow from Investing Activities: Purchase of Plant Assets Sale of Plant Assets Purchase of Investment -79900 12900 -25700 Net Cash used by Investing Activities -92700 Cash flow from Financing Activities: Redemption of Bonds Payment of Cash Dividends Issuance of Common Stock -30600 -49200 44800 Net Cash used by Financing Activities -35000 Net Increase in Cash Cash, Beginning Balance Cash, Ending Balance 56500 48900 105400