Statement of cash flows (indirect method) The comparative income statement and balance sheets of The Towne Company
Question:
Statement of cash flows (indirect method) The comparative income statement and balance sheets of The Towne Company as of December 31, 2016 and 2015 are as follows:
COMPANY MUNICIPALITY Statement of income For the year ended December 31, 2016 | ||
---|---|---|
Earned Service Fees | $317,000 | |
Income from dividends and interests | 14,000 | |
$331,000 | ||
Salaries and other operating expenses | $285,000 | |
depreciation expense | 55,000 | |
Franchise amortization expense | 10,000 | |
Loss on Equipment Sale | 7,000 | |
Investment Sale Gain | (17,000) | 340.000 |
Net loss | $(9,000) |
COMPANY MUNICIPALITY Balance sheets | ||
---|---|---|
December 31, 2016 | December 31, 2015 | |
Assets | ||
Money | $43,000 | $33,000 |
accounts receivable | 13,000 | 18,000 |
interest receivable | - | 4,000 |
Prepaid expenses | 16,000 | 10,000 |
Long-term investments: available for sale | - | 70.000 |
Investment fair value adjustment | - | 10,000 |
plant assets | 696,000 | 655.000 |
Accumulated depreciation | (237,000) | (185.000) |
Franchise | 91,000 | 29,000 |
total assets | $622,000 | $644,000 |
Liabilities and Equity | ||
Accrued Obligations | $12,000 | $14,000 |
Pay | - | 26,000 |
Common Stock ($10 par value) | 595,000 | 535.000 |
Retained earnings | 35,000 | 59,000 |
Unrealized gain on investments | - | 10,000 |
Auto carter | (20,000) | - |
Total Liabilities and Stockholders' Equity | $622,000 | $644,000 |
The following transactions occurred during the year:
1. Sold equipment for $9,000 in cash that originally cost $19,000 and had accumulated depreciation of $3,000.
2. He sold long-term investments that had cost $70,000 for $87,000 in cash. Unrealized gains totaling $10,000 related to these investments had been recorded in prior years. At the end of the year, the balances of the fair value adjustment account and the unrealized gain account were eliminated.
3. He paid cash to extend the company's exclusive franchise for another three years.
4. He paid a promissory note at the bank on January 1.
5. Declared and paid a dividend of $15,000.
6. Purchase of own shares in cash.
7. Acquired land valued at $60,000 by issuing 6,000 common shares.
- Required
a. Calculate the change in cash that occurred in 2016.
b. Prepare a statement of cash flows using the indirect method. - c. Calculate Change in Cash during 2016
Accounting What the Numbers Mean
ISBN: 978-1259535314
11th edition
Authors: David Marshall, Wayne McManus, Daniel Viele