Response to the following problem:
During the year ended December 31, 2017, Wheaton Co. Ltd. Reported $20,000 of net income, consisting of $95,000 of revenues, $70,000 of operating expenses, and $5,000 of income taxes expense. Following is
a list of transactions that occurred during the year:
a. Depreciation expense, $3,000 (included with operating expenses)
b. Increase in wages payable, $500
c. Increase in accounts receivable, $900
d. Decrease in merchandize inventory, $1,200
e. Amortization of patent, $100
f. Non-current borrowings paid in cash, $5,000
g. Issuance of common shares for cash, $12,500
h. Equipment, cost $10,000, acquired by issuing common shares
i. At the end of the fiscal year, a $5,000 cash dividend was declared, payable one month later
j. Old machinery sold for $6,000 cash; it originally cost $15,000 (one ha lf depreciated). Loss reported on income statement as ordinary\ item and included in the $70,000 of operating expenses.
k. Decrease in accounts payable, $1,000.
l. Cash at January 1, 2017 was $1,000; change in cash during the year, $37,900 m. There was no change in income taxes owing.
Required:
1. Prepare a cash flow table. The first two columns are not necessary.
Enter amounts above in the "Change" columns. (Hint: the change to cash is the balancing figure in the "Change" columns - $37,900.)
2. Prepare a statement of cash flows.
3. Explain what this statement tells you about Wheaton Co. Ltd.