Answer:
Harlan Mining Co.
Statement of Cash Flows for the year ended December 31, 2015
Operating activities:
Net income $216,000
Add non-cash expenses:
Loss on sale of investments 36,000
Depreciation on equipment 60,000
Changes in working capital:
Accounts receivable -108,000
Inventory 72,000
Accounts payable 60,000
Accrued liabilities -30,000
Net cash from operations $306,000
Investing activities:
Short-term Investment $228,000
Property, plant and equipment -48,000
Net cash from investments $180,000
Financing activities;
Bonds payable repaid -$180,000
Cash dividends paid -144,000
Net cash from financing -$324,000
Net cash inflows $162,000
Explanation:
a) Data and Calculations:
Financial statements of Harlan Mining Co. for 2015 and 2014 are provided below.
BALANCE SHEETS
12/31/2015 12/31/2014 Change
Cash $ 306,000 $ 144,000 +$162,000
Short-term Investment $0 $ 264,000 -$264,000
Accounts receivable 270,000 162,000 +108,000
Inventory 288,000 360,000 -72,000
Property, plant and equipment $ 456,000 $ 408,000 +48,000
Less accumulated depreciation (240,000) (180,000) (60,000)
$1,080,000 $1,158,000
Accounts payable $ 132,000 $ 72,000 +$60,000
Accrued liabilities 264,000 294,000 -30,000
Bonds payable 270,000 450,000 -180,000
Common stock 162,000 162,000 0
Retained earnings 252,000 180,000
$1,080,000 $1,158,000
INCOME STATEMENT
For the Year Ended December 31, 2015
Sales revenue $ 6,300,000
Cost of sales 5,328,000
Gross profit 972,000
Selling and administrative expenses 648,000
Income from operations 324,000
Less: Loss on sale of investments 36,000
Income before taxes 288,000
Income tax expense 72,000
Net income $216,000
Additional data:
1. Cash dividends for the year 2015 $144,000
2. During the year, no plant assets are sold. All new plant assets are purchased by cash.
3. All depreciation expense is included in the selling expense category.
