Championship Boxing, Inc. is a small manufacturer of cardboard boxes of all sizes. You have reported for your first day of work, and the company is in an uproar. Yearly financial statements are being prepared, but a computer malfunction of the companys new BOX-9000 computer has inadvertently erased parts of the companys balance sheet, along with almost all related data except the companys statement of cash flows. The IT department is working to retrieve earlier backups, but estimates that the reconstruction of the data will take about 24 hours.

Unfortunately, financial statements are to be presented at a stockholders meeting in one hour. The company uses the indirect method to prepare its statement of cash flows (rather than the direct method), so your new supervisor believes the missing data for the balance sheet can be prepared using the statement of cash flows. You are assigned this task, since you were top student in your business school class. Meanwhile, the supervisor will go to the stockholders meeting and give some introductory remarks.

In addition to the statement of cash flows, the following data survived the computer mishap:

A.

The investments were sold for $280,000 cash.

B.

Equipment was acquired for $152,000 cash.

C.

Land was acquired for $326,000 cash.

D.

There were no disposals of equipment during the year.

E.

12,500 shares of common stock were sold for cash during the year.

F.

Championship Boxing, Inc.

Statement of Cash Flows

For the Year Ended December 31, 2016

1

Cash flows from operating activities:

2

Net income

$186,540.00

3

Adjustments to reconcile net income to net cash flow from operating activities:

4

Depreciation

18,400.00

5

Gain on sale of investments

(50,000.00)

6

Changes in current operating assets and liabilities:

7

Increase in accounts receivable

(25,370.00)

8

Increase in inventories

(33,450.00)

9

Increase in accounts payable

41,070.00

10

Decrease in accrued expenses payable

(12,470.00)

11

Net cash flow from operating activities

$124,720.00

12

13

Cash flows from investing activities:

14

Cash received from sale of investments

$280,000.00

15

Less: Cash paid for purchase of land

$326,000.00

16

Less: Cash paid for purchase of equipment

152,000.00

478,000.00

17

Net cash flow used for investing activities

(198,000.00)

18

19

Cash flows from financing activities:

20

Cash received from sale of common stock

$187,500.00

21

Less cash paid for dividends

91,200.00

22

Net cash flow from financing activities

96,300.00

23

Increase in cash

$23,020.00

24

Cash at the beginning of the year

585,920.00

25

Cash at the end of the year

Using the information on previous panels, complete the comparative balance sheet below.

Score: 24/68

Championship Boxing, Inc.

Comparative Balance Sheet

December 31, 2016 and 2015

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash		$585,920.00
4	Accounts receivable (net)	230,950.00
5	Inventories		618,320.00
6	Investments	0.00
7	Land		0.00
8	Equipment	705,120.00
9	Accumulated depreciation-equipment	(166,400.00)
10	Total assets
11	Liabilities and Stockholders Equity
12	Accounts payable (merchandise creditors)		$391,830.00
13	Accrued expenses payable (operating expenses)	41,150.00
14	Dividends payable		19,200.00
15	Common stock, $4 par		100,000.00
16	Paid-in capital: Excess of issue price over parcommon stock		280,000.00
17	Retained earnings	1,290,830.00
18	Total liabilities and stockholders equity

$608,940.00

There was a $96,000 debit to Retained Earnings for cash dividends declared.