Question
1.EX. 21-11 Spreadsheet and Statement The following 2016 information is available for Stewart Company: Condensed Income Statement for 2016 Sales $9,000 Cost of goods sold
1.EX. 21-11
Spreadsheet and Statement
The following 2016 information is available for Stewart Company:
Condensed Income Statement for 2016
Sales
$9,000
Cost of goods sold
(6,000)
Other expenses
(2,000)
Loss on sale of equipment
(260)
Gain on sale of land
400
Net income
$1,140
Comparative Balance Sheets
December 31,
2015
December 31,
2016
Cash
$700
$1,130
Accounts receivable
450
310
Inventory
350
400
Land
300
500
Equipment
1,600
1,800
Less: Accumulated depreciation
(200)
(150)
Total Assets
$3,200
$3,990
Accounts payable
$600
$750
Bonds payable (due 1/1/2018)
1,000
1,000
Common stock, $10 par
900
1,400
Retained earnings
700
840
Total Liabilities and Shareholders' Equity
$3,200
$3,990
Partial additional information:
The equipment that was sold for cash had cost $400 and had a book value of $300.
Land that was sold brought a cash price of $530.
Fifty shares of stock were issued at par.
Required:
Making whatever additional assumptions that are necessary,
spreadsheet to support a 2016 statement of cash flows for Stewart. If an amount is zero, enter "0".
STEWART COMPANY
Cash Flows Worksheet
For Year Ended December 31, 2016
Balances
12/31/2015
Balances
12/31/2016
Balances
Change
Worksheet
Entries
Debit
Worksheet
Entries
Credit
Debits
Cash
700
1130
430
430
Noncash Accounts:
Accounts receivable
450
310
140
140
Inventory
350
400
50
50
Land
300
500
200
330130
Equipment
1600
1800
200
600400
Totals
3400
4140
740
Credits
Accumulated depreciation
200
150
50
100
50
Accounts payable
600
750
150
150
Bonds pay. (due 1/1/2021)
1000
1000
0
Common stock, $10 par
900
1400
500
500
Retained earnings
700
840
140
?
1140
Totals
3400
4140
740
?
?
Cash Flow From Operating Activities
Net income
1140
Add: Decrease in accounts receivable
140
Add: Loss on sale of equipment
260
Add: Depreciation expense
50
Add: Increase in accounts payable
150
Less: Increase in inventory
50
Less: Gain on sale of land
400
Cash Flows From Investing Activities
530
Proceeds from sale of land
?
Payment for purchase of land
?
Proceeds from sale of equipment
?
Payment for purchase of equipment
?
Cash Flows From Financing Activities
?
Proceeds from issuance of common stock
500
Payment of dividends
?
Net increase in cash
?
?
Totals
$
$
Feedback
You should review the Comprehensive Example (Spreadsheet Method) in your text before you begin this exercise. This will provide both the necessary format for the spreadsheet and a detailed discussion of the various entries that are summarized below.
To complete the spreadsheet you should use the following steps:
1.Account for all the changes in the noncash accounts that occurred during the current period.
2.Reconstruct the journal entries that caused the changes in the noncash accounts directly on the spreadsheet, in terms of the implied effects on cash inflows and outflows for operating, investing, and financing activities.
3.Net income is adjusted on the spreadsheet to reconcile it to the net cash flow from operating activities.
4.Account for the changes in the current asset and current liability accounts.
5.Account for the changes in the noncurrent accounts. Review each noncurrent account and determine the entry responsible for its change.
2. Prepare the statement of cash flows. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.
STEWART COMPANY
Statement of Cash Flows
For Year Ended December 31, 2016
Operating Activities:
Net income
$
Adjustment for noncash income items:
Add: Depreciation expense
Add: Loss on sale of equipment
Less: Gain on sale of land
Adjustments for cash flow effects
from working capital items:
Decrease in accounts receivable
Increase in inventory
Increase in accounts payable
Net cash provided by operating activities
$
Investing Activities:
Proceeds from sale of land
$
Payment for purchase of land
Proceeds from sale of equipment
Payment for purchase of equipment
Net cash used for investing activities
Financing Activities:
Proceeds from issuance of common stock
$
Payment of dividends
Net cash used for financing activities
Net increase in cash
$
Cash, January 1, 2016
Cash, December 31, 2016
$
The blank spaces and question marks indicate what I cannot figure out.
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