This exercise will prepare you to use a worksheet in helping you prepare the data for the statement of cash flows.
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Jennifer & Dana Designs Inc. |
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Assets |
2014 |
2013 |
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Cash |
$98,700 |
$47,250 |
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Accounts Receivable |
87.800 |
56.000 |
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Inventories |
121,900 |
103,650 |
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Investments |
81,500 |
87,000 |
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Plant Assets |
250,000 |
205,000 |
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Accumulated Depreciation |
(49500.) |
(49500.) |
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Total |
$590400 |
$458900 |
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Liabilities and Stockholders” Equity |
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Accounts Payable |
$57,700 |
$48,280 |
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Accrued Expenses Payable |
121,000 |
18,830 |
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bonds Payable |
100,000 |
80,000 |
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Common Stock |
250.000 |
200.000 |
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Retained Earnings |
170.600 |
111.790 |
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Total |
$590400 |
$458900 |
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Jennifer & Dana Designs Inc. |
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Sales |
5312.500 |
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Gain on sale of plant assets |
8,750 |
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|
321,250 |
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Less: |
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Cost of goods sold |
599,460 |
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Operating expenses (excluding depreciation expense) |
14,670 |
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Depreciation expense |
49, 700 |
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Income taxes |
7,270 |
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Interest expense |
2,940 |
174.040 |
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Net income |
$147210 |
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Additional information:
- New plant assets costing $92,000 were purchased for cash during the year.
- Investments were sold at cost.
- Plant assets costing $47,000 were sold for $15,550 and resulted in a gain of $8,750.
- A cash dividend of $88,400 was declared and paid during the year.
Instructions
Prepare a worksheet for a statement of cash flows. Enter the reconciling items directly in the work sheet columns, identifying the debit and credit amounts alphabetically.
Analysis:
- a. Increase in receivables reduces cash inflow-credit.
- b. Increase in inventories increases cash outflow-credit.
- c. Increase in accounts payable reduces cash outflow-debit.
- d. Decrease in accrued expenses payable increases cash outflow-credit.
- e. Sale of investments increases cash inflow-debit.
- f. Purchase of plant assets increases cash outflow-credit
- g. Depreciation expense is a noncash charge to income-debit.
- h. Sale of plant assets increases cash inflow-debit.
- i. Issue of bonds increases cash inflow-debit.
- j. Issue of common stock increases cash inflow-debit.
- k. Net income increases cash inflow-debit.
- l. Payment of dividends increases cash outflow-credit.
- r. Increase in cash balance.