Refer to all of the facts in Problem 12-9A. Problem 12-9A. The balance sheet of Poodle Company

Question:

Refer to all of the facts in Problem 12-9A.

Problem 12-9A.

The balance sheet of Poodle Company at the end of 2016 is presented here, along with certain other information for 2017:

..........................................................................December 31, 2016

Cash .................................................................................$ 155,000

Accounts receivable ................................................................140,000

Total current assets ............................................................$ 295,000

Land ...............................................................................$ 100,000

Plant and equipment ...............................................................700,000

Accumulated depreciation ......................................................(175,000)

Investments .........................................................................125,000

Total long-term assets .........................................................$ 750,000

Total assets ....................................................................$1,045,000

Current liabilities .................................................................$ 325,000

Bonds payable ....................................................................$ 100,000

Common stock ....................................................................$ 500,000

Retained earnings ..................................................................120,000

Total stockholders' equity ......................................................$ 620,000

Total liabilities and stockholders' equity ....................................$1,045,000

Other information is as follows:

a. Net income for 2017 was $50,000.

b. Included in operating expenses was $25,000 in depreciation.

c. Cash dividends of $40,000 were declared and paid.

d. An additional $50,000 of common stock was issued for cash.

e. Bonds payable of $100,000 were purchased for cash and retired at no gain or loss.

f. Cash purchases of plant and equipment during the year were $60,000.

g. An additional $200,000 of land was acquired in exchange for a long-term note payable.

h. During the year, sales exceeded cash collections on account by $15,000. All sales are on account.

i. The amount of current liabilities decreased by $20,000 during the year.

Required

1. Prepare a balance sheet at December 31, 2017.

2. Using the format in the chapter's appendix, prepare a statement of cash flows work sheet.

3. Prepare a statement of cash flows for 2017 using the indirect method in the Operating Activities section.

4. Provide a possible explanation as to why Poodle decided to purchase and retire bonds during

2017.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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