CREATE A 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. Prepare the statement of cash flow in good form with all necessary disclosures, including disclosures about noncash financing and investing activities.

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		$ 30,000		$ 5,000
Marketable Securities (at cost)	$ 11,700	$ 13,000	$ 1,300		$ 1,300
Allowance for Change in Value	$ 1,500	$ 1,800	$ 300		$ 300
Construction in Process	$ 168,750	$ 405,000	$ 236,250		$ 236,250
Prepaid Expenses	$ 45,000	$ 10,000	$ (35,000)				$ 35,000
Investments (long-term)	$ -	$ 13,500	$ 13,500		$ 15,500		$ 2,000
Leased Equipment	$ -	$ 20,000	$ 20,000		$ 20,000
Building	$ 30,000	$ -	$ (30,000)				$ 30,000
Deferred Tax Asset	$ 5,375	$ 2,200	$ (3,175)				$ 3,175
Land	$ 10,500	$ 10,500	$ -
Discount on Bonds Payable	$ -	$ 1,305	$ 1,305		$ 1,350		$ 45
Totals	$ 734,525	$ 1,482,855	$ 748,330
Credits
Allowance for Doubtful Accounts	$ 6,000	$ 4,500	$ (1,500)		$ 1,500
Accounts Payable	$ 87,500	$ 210,000	$ 122,500				$ 122,500
Deferred Tax Liability	$ 1,000	$ 3,300	$ 2,300				$ 2,300
Income Tax Payable	$ 3,500	$ 9,000	$ 5,500				$ 5,500
Note Payable (long-term)	$ 3,500	$ -	$ (3,500)		$ 3,500
Accumulated Depreciation on Building	$ 2,500	$ -	$ (2,500)		$ 2,500
Accumulated Depreciation on Leased Asset	$ -	$ 3,000	$ 3,000				$ 3,000
Lease Obligation	$ -	$ 18,000	$ 18,000				$ 18,000
Interest Payable on Lease Obligation	$ -	$ 1,800	$ 1,800				$ 1,800
Interest Payable (bonds)	$ -	$ 1,800	$ 1,800				$ 1,800
Bonds Payable	$ -	$ 45,000	$ 45,000				$ 45,000
Billings on Construction in Process	$ 150,000	$ 325,000	$ 175,000				$ 175,000
Pension Liability	$ 150,000	$ 400,000	$ 250,000		$ 100,000		$ 350,000
Convertible Preferred Stock, $100 par	$ 9,000	$ -	$ (9,000)		$ 9,000
Common Stock, $10 par	$ 14,000	$ 24,500	$ 10,500				$ 10,500
Additional Paid-in Capital	$ 8,700	$ 13,700	$ 5,000				$ 5,000
Unrealized Increase in Value of Marketable Securities	$ 1,500	$ 1,800	$ 300				$ 300
Retained Earnings	$ 297,325	$ 421,455	$ 124,130		$ 650		$ 124,780
Totals	$ 734,525	$ 1,482,855	$ 748,330
Cash Flows from Operating Activities:	Debits	Credits
Net Income	$ 124,780
Depreciation Expenses	$ 3,000
Loss on Building Destroyed Due to Fire	$ 1,500
Amortization Discount on Bond	$ 45
Bad Debt	$ 3,500
Gain on Conversion of Preferred Stock		$ 4,000
Gain on Repayment of Note Payable		$ 1,000
Shared Income from Subsidiary		$ 6,000
Dividend Received from Subsidiary	$ 2,000
Provision for Pension	$ 350,000
Increase in Accounts Receivable		$ 30,000
Increase in Inventory (billings on construction in process)		$ 61,250
Decrease in Prepaid Expenses	$ 35,000
Increase in Income Tax Payable	$ 10,975
Increase in Accounts Payable	$ 122,500
Increase in Interest Payable	$ 3,600
Decrease in Pension Liability		$ 100,000
Cash Flows from Investing Activities:
Marketable Security		$ 1,300
Investments (long-term)		$ 9,500
Lease Obligation Paid		$ 2,000
Sale of Building	$ 26,000
Cash Flows from Financing Activities
Common Stock Issued (including additional capital)	$ 8,000
Bonds Payable	$ 43,650
Dividends Paid		$ 650
Net Increase in Cash		$ 518,850
Totals	$ 734,550	$ 734,550

					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.