Answer:
The Murdock Corporation
Statement of Cash Flows
For the year ended December 31, 2016
Operating Activities:
Net income $68,000
Less:
Gain from sale of available-for-sale 6,300
Gain from sale of equipment 1,900
Operating cash $59,800
Working capital changes:
Accounts receivable -13,550
Inventory -21,800
Prepaid insurance 680
Accounts payable -$74,130
Salaries payable -6,300
Notes payable (current) -51,800
Net operating cash flows ($107,100)
Investing Activities:
Sale of Available-for-sale securities $84,800
Sale of Equipment 8,700
Purchase of new equipment -163,000
Net investing cash flows ($69,500)
Financing Activities:
Issue of 6% bonds payable $218,000
Payment of cash dividends -29,000
Net financing cash flows $189,000
Net cash flows $12,400
Explanation:
a) Data and Calculations:
2021 2020 Change
Cash $97,355 $33,755 +$63,600
Available-for-sale debt securities
(not cash equivalents) 24,500 103,000 -78,500
Accounts receivable 98,000 84,450 +13,550
Inventory 183,000 161,200 +21,800
Prepaid insurance 3,120 3,800 -680
Land, buildings, and equipment 1,286,000 1,143,000 +143,000
Accumulated depreciation (628,000) (590,000)
Total assets $1,063,975 $939,205
Accounts payable $92,540 $166,670 -$74,130
Salaries payable 27,200 33,500 -6,300
Notes payable (current) 41,200 93,000 -51,800
Bonds payable 218,000 0 +218,000
Common stock 300,000 300,000 0
Retained earnings 385,035 346,035
Total liabilities and
shareholders' equity $1,063,975 $939,205
Additional Data:
1. Sale of Available-for-sale securities $84,800
Gain from sale of available-for-sale $6,300
2. Sale of Equipment $8,700
Gain from sale of equipment $1,900
3. Issue of 6% bonds payable $218,000
4. Purchase of new equipment $163,000
5. Payment of cash dividends $29,000
6. Net income $68,000
