Q40PGB
Question
Accountants for Benson, Inc. have assembled the following data for the year ended December 31, 2018:
2018 2017 Current Assets: Cash \( 105,100 \) 18,000 Accounts Receivable 64,400 68,900 Merchandise Inventory 86,000 82,000 Current Liabilities: Accounts Payable 58,000 56,100 Income Tax Payable 14,700 16,900
Transaction Data for 2018:
Issuance of common stock for cash \( 37,000
Payment of notes payable \) 47,100
Depreciation expense 24,000
Payment of cash dividends 53,000
Purchase of equipment with cash 69,000
Issuance of notes payable to borrow cash 68,000
Acquisition of land by issuing long-term notes payable 123,000
Gain on sale of building 4,500
Book value of building sold 61,000
Net income 66,000
Prepare Benson’s statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and financing activities
Step-by-Step Solution
VerifiedAnswer
In the cash flow statement, net increase in cash equals $87,100.
Benson Inc. Statement of Cash Flows For the year ended December 31, 2018 | |
Cash Flows From Operating Activities: | |
Net Income | $66,000 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |
Depreciation expense | $24,000 |
Gain on sale of building | ($4,500) |
Decrease in account receivables ($68,900-$64,400) | $4,500 |
Increase in merchandise inventory ($86,000-$82,000) | ($4,000) |
Increase in account payable ($58,000-$56,100) | $1,900 |
Decrease in income tax payable ($16,900-$14,700) | ($2,200) |
Net cash provided/ (used) in operating activities | $85,700 |
Cash Flows From Investing Activities: | |
Purchase of equipment | ($69,000) |
Sale of land | $65,500 |
Net cash provided/ (used) in investing activities | ($3,500) |
Cash Flows From Financing Activities: | |
Issuance of common stock | $37,000 |
Payment of notes payable | ($47,100) |
Dividend paid | ($53,000) |
Issuance of notes payable | $68,000 |
Net cash provided/ (used) in financing activities | $4,900 |
Net increase/(Decrease) in cash | $87,100 |
Cash Balance, December 31, 2017 | $18,000 |
Cash Balance, December 31, 2018 | $105,100 |
Benson Inc. Statement of Cash Flows (Partial) For the year ended December 31, 2018 | |
Non-cash Investing and financing activities | |
Acquisition of land by issuing long-term notes payable | $123,000 |
Total Non-cash Investing and financing activities | $123,000 |