Question - The following are comparative balance sheets and an income statement for the Cupcake Company.
Cupcake Company Balance Sheets As of December 31
As of December 31
2016 2015
Assets:
Cash $25,000 $100,000
Accounts receivable 163,500 125,000
Inventory 183,000 220,000
Property, Plant and Equipment 70,000 50,000
Less: Accumulated Depreciation (40,000) (35,000)
Long-term investments 20,000 65,000
Valuation Allowance - LT Investments 4,000 2,000
Totals $425,500 $527,000
Liabilities and shareholders' equity:
Accounts payable - Merchandise $60,000 $110,000
Operating expenses payable 29,500 25,000
Notes Payable 10,000 -0-
Bonds payable 60,000 110,000
Common stock 150,000 125,000
Treasury Stock, Common (10,000) -0-
Retained earnings 122,000 155,000
Accumulated Other Comprehensive Income 4,000 2,000
Totals $425,500 $527,000
Cupcake Company Income Statement For the Year Ended December 31, 2016
Sales $571,000
Cost of Goods sold 372,500
Gross Profit $198,500
Operating expenses (excluding depreciation expense) 182,000
Depreciation expense 5,000
Income from operations $11,500
Other expenses:
Loss on sale of long-term investment (4,500)
Net Income 7,000
Other comprehensive Income - Unrealized holding gains 2,000
Comprehensive Income $ 9,000
Additional Information 2016:
- Cash dividends were declared and paid in 2016.
- No stock dividends were declared or issued in 2016
- No Property, Plant or Equipment was sold in 2016
- During 2016, Property, Plant and Equipment of $10,000 was acquired by signing a $10,000 Notes Payable on the day of acquisition. All other acquisitions were paid with cash
- The following were purchased using cash: Long-term investments and Treasury Stock
- Any change in Bonds Payable relates to repayment of principle (face) amounts.
- All sales of Common Stock (No par value) were for cash
Prepare the Statement of Cash Flows of Cupcake Company for the year ended December 31, 2016.
A. Prepare a Statement of Cash Flows (direct method) using the "Spreadsheet Approach" we demonstrated in class.
B. Using your spreadsheet from A above prepare a Statement of Cash Flows, in good form, for the year ended December 31, 2016 (A reconciliation schedule is not required.)
C. Submit both A and B electronically in Canvas using separate tabs for each.