Complete the following questions. In addition to answering the items below, you must submit an analysis of the assignment. Analyze the specific outcomes and write an analysis directed toward the management team at Smart Company describing what the numbers mean and how they relate to the business. Submit journal entries in an Excel file and written segments in an MS Word document. For written answers, please make sure your responses are well-written, formatted per CSU-Global Guide to Writing and APA and have proper citations, where applicable.

Smart Company is preparing its financial statements for the year ended June 30, 2017. The financial statements are complete except for the statement of cash flows. You have been asked to prepare a statement of cash flows for the year ended June 30, 2017.

Download the excel spreadsheet found in the link below.

Required:

Prepare a spreadsheet to support a statement of cash flows for the year ended June 30, 2017.

In the tab named Journal Entries, show in journal entry form, the entries that would be made in preparation of the statement of cash flows.

Prepare Smart Companys statement of cash flows for the year ended June 30, 2017. Prepare the statement of cash flows using the indirect method. Note: For full credit, you must prepare the statement of cash flow in good form with all necessary disclosures, including disclosures about noncash financing and investing activities.

You are the accountant for Smart Construction Company, a large construction company in Colorado. You have been presented with the following

financial information for Smart and asked to prepare the Statement of Cash Flows for the year ended June 30, 2017. You will complete all work for

the project in this excel file, which includes the following tabs:

1. Facts - Information taken from Smart's accounting records and additional information regarding the cash flows as of June 30, 2017.

2. Worksheet - Worksheet template (also see Example 21.3a in text).

3. Cash Flows - Statement of Cash Flows template (also see Example 21.3b in text).

Account Balances

June 30, 2016

June 30, 2017

Debits

Cash

$ 361,700

$ 880,550

Accounts Receivable

100,000

125,000

Marketable Securities (at cost)

11,700

13,000

Allowance for Change in Value

1,500

1,800

Construction in Process

168,750

405,000

Prepaid Expenses

45,000

10,000

Investments (long-term)

-

13,500

Leased Equipment

-

20,000

Building

30,000

-

Deferred tax asset

5,375

2,200

Land

10,500

10,500

Discount on Bonds Payable

-

1,305

Totals

734,525

1,482,855

Credits

Allowance for doubtful accounts

$ 6,000

$ 4,500

Accounts Payable

87,500

210,000

Deferred tax liability

1,000

3,300

Income Taxes Payable

3,500

9,000

Note Payable (long-term)

3,500

-

Accumulated Depreciation on Building

2,500

-

Accumulated Depreciation on Leased Asset

-

3,000

Lease obligation

-

18,000

Interest payable on lease obligation

-

1,800

Interest payable (Bonds)

-

1,800

Bonds payable

-

45,000

Billings on contruction in process

150,000

325,000

Pension liability

150,000

400,000

Convertible preferred stock, $100 par

9,000

-

Common Stock, $10 par

14,000

24,500

Additional Paid-in Capital

8,700

13,700

Unrealized Increase in Value of Marketable Securities

1,500

1,800

Retained Earnings

297,325

421,455

Totals

734,525

1,482,855

Additional information:

a. Dividends declared and paid totaled $650.

b. 300 shares of common stock (at par) were issued for cash.

c. On July 1, 2016, convertible preferred stock that had originally been issued at par value were

converted into 500 shares of common stock. The book value method was used to account for the

conversion.

d. The long-term note payable was paid by issuing 250 shares of common stock at the beginning of the

fiscal year.

e. Short-term marketable securities were purchased at a cost of $1,300. The portfolio was increased by

$300 to a $14,800 fair value at year-end by adjusting the related allowance account.

f. During the year, a 30% interest in Ricochet Co. was purchased as an investment for $9,500. Ricochet

reported $20,000 in net income for the year and paid dividends of $2,000 to Smart.

g. $5,000 of accounts receivable were written off as uncollectible during the year.

h. Smarts inventory consists of Construction-in-Process in excess of the Billings on

Construction-in-Process account balance.

i. A building was destroyed by fire during the year and insurance proceeds of $26,000 were collected.

j. The 12% bonds payable were issued on February 28, 2017, at 97. They mature on February 28, 2027.

The company uses the straight-line method to amortize bond premiums and discounts.

k. Smart recorded pension expense of $350,000 for the year.

l. A lease agreement was signed on July 1st, 2016 for the use of equipment worth $20,000. The

company determined that the transaction should be recorded as a capital lease.

SMART CONSTRUCTION COMPANY

Cash Flows Worksheet

For Year Ended June 30, 2017

Balances

Change

Worksheet Entries

Account Titles

6/30/2016

6/30/2017

Increase (Decrease)

Debit

Credit

Debits

Cash

361,700

880,550

518,850

518,850

Noncash Accounts:

Accounts Receivable

100,000

125,000

25,000

Marketable Securities (at Cost)

11,700

13,000

1300

Allowance for change in value

1,500

1,800

300

Construction in Process

168,750

405,000

236,250

Prepaid Expenses

45,000

10,000

(35,000)

Investment ( Long-Term)

13,500

13,500

Leased Equipment

20,000

20,000

Building

30,000

(30,000)

Deferred tax Asset

5,375

2,200

(3,175)

Land

10,500

10,500

0

Discount on Bonds Payable

1,305

1,305

Totals

734,525

1,482,855

1,408,330

Credits

Allowance for doubtful accounts

6,000

4,500

(1,500)

Accounts Payable

84,500

210,000

125,500

Deferred tax Liability

1,000

3,300

2,300

Income Taxes Payable

3,500

9,000

5,500

Note Payable (long-term)

3,500

(3,500)

Accumulated Depreciation on Building

2,500

(2,500)

Accumulated Depreciation on Leased Asset

3,000

3,000

Lease obligation

18,000

18,000

Interest payable on lease obligation

1,800

1,800

Interest payable (bonds)

1,800

1,800

Bonds Payable

45,000

45,000

Billings on Contruction in process

150,000

325,000

310,000

Pension liability

150,000

400,000

250,000

Convertible preferred stock, $100 par

9,000

(9,000)

Common Stck, $10 par

14,000

24,500

10,500

Additional Paid-in Capital

8,700

13,700

5,000

Unrealized increa in value of markerable securities

1,500

1,800

300

Retaining earnings

297,325

421,455

124,130

Totals

734,525

1,482,855

1,408,330

Cash Flows from Operating Activities:

Cash Flows from Investing Activities:

Cash Flows from Financing Activities

Investing and Financing Activities Not Affecting Cash:

Net Increase in Cash

Totals

Smart Construction Company
Statement of Cash Flows
For Year Ended June 30, 2017
Operating Activities:
Net Income
Adjustments for noncash income items:
Adjustments from cash flow effect from working capital items:
Net cash provided (used) by operating activities
Investing activities:
Net cash provided (used) by investing activities
Financing Activities:
Net cash provided (used) by financing activities
Net increase in cash (see Schedule 1)
Cash, June 30, 2016
Cash, June 30, 2017
Schedule 1: Investing and Financing Activities Not Affecting Cash