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Mice21 [21]
2 years ago
7

The Murdock Corporation reported the following balance sheet data for 2018 and 2017: 2018 2017 Cash $91,805 $30,755 Available-fo

r-sale debt securities (not cash equivalents) 22,000 98,000 Accounts receivable 93,000 79,950 Inventory 178,000 156,700 Prepaid insurance 2,670 3,300 Land, buildings, and equipment 1,276,000 1,138,000 Accumulated depreciation 623,000 585,000 Total assets $1,040,475 $921,705 Accounts payable $88,040 $161,670 Salaries payable 25,200 31,000 Notes payable (current) 36,700 88,000 Bonds payable 213,000 0 Common stock 300,000 300,000 Retained earnings 377,535 341,035 Total liabilities and shareholders' equity $1,040,475 $921,705 Additional information for 2018: 1) Sold available-for-sale debt securities costing $76,000 for $81,800. 2) Equipment costing $20,000 with a book value of $6,300 was sold for $7,950. 3) Issued 6% bonds payable at face value, $213,000. 4) Purchased new equipment for $158,000 cash. 5) Paid cash dividends of $26,500. 6) Net income was $63,000. Prepare a statement of cash flows for 2018 in good form using the indirect method for cash flows from operating activities.
Business
1 answer:
worty [1.4K]2 years ago
3 0

Answer:

net income                                                    $63,000

+ depreciation                                                $51,700

- gain on sale of equipment                          ($1,650)

change in current assets:

- increase in accounts receivables             ($13,050)

- increase in inventory                                 ($21,300)

+ decrease in prepaid insurance                     $630

change in current liabilities:

- decrease in accounts payable                ($73,630)

- decrease in salaries payable                    ($5,800)

- decrease in notes payable                      ($51,300)

<u>net cash provided by operating activities ($51,400)</u>

Explanation:

2018 2017

Available-for-sale debt securities (not cash equivalents) 22,000 98,000 INVESTING ACTIVITY

Accounts receivable 93,000 79,950 = -13,050

Inventory 178,000 156,700 = -21,300

Prepaid insurance 2,670 3,300 = 630

Land, buildings, and equipment 1,276,000 1,138,000, INVESTING ACTIVITY

Accumulated depreciation 623,000 585,000 = 38,000 + 13,700 = 51,700

Accounts payable $88,040 $161,670 = -73,630

Salaries payable 25,200 31,000 = -5,800

Notes payable (current) 36,700 88,000 = -51,300

Bonds payable 213,000 0 FINANCING ACTIVITY

2) Equipment costing $20,000 with a book value of $6,300 was sold for $7,950 = 13,700 added to accumulated depreciation, -1,650 gain on sale

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Entries:                                    Debit                         Credit
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