Evaluating Performance HomewokCalculator Print Item Mastery Problem: Statement of Cash Flows Championship Boxing, Inc. 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 company's new BOX-9000 computer has inadvertently erased parts of the company's balance sheet, along with almost all related data except the company's 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 The investments were sold for $280,000 cash .Equipment was acquired for $152,000 cash. .Land was acquired for $326,000 cash There were no disposals of equipment during the year. . 12,500 shares of common stock were sold for cash during the year There was a $96,000 debit to Retained Earnings for cash dividends declared. Statement of Cash Flows Your supervisor has provided you with the following statement of cash flows, prepared using the indirect method. Recall that the statement of cash flows consists of three sections: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Review the statement, and then proceed to the next panel. Championship Boxing, Inc. Statement of Cash Flows For the Year Ended December 31, 20Y8 Cash flows from (used for) operating activities: Evaluating Performance HomeworkCalculator Print Item Championship Boxing, Inc. Statement of Cash Flows For the Year Ended December 31, 20Y8 Cash flows from (used for) operating activities Net income $186,540 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 18,400 Gain on sale of investments (50,000) Changes in current operating assets and liabilities: (25,390) (33,450) 41,130 (12,470) Increase in accounts receivable Increase in inventories Increase in accounts payable Decrease in accrued expenses payable Net cash flow from operating activities $124,760 Cash flows from (used for) investing activities: Cash received from sale of investments Cash paid for purchase of land Cash paid for purchase of equipment $280,000 (326,000) (152,000) Net cash flow used for investing activities (198,000) Cash flows from (used for) financing activities: Evaluating Performance HomeworkCalculator Print Itonm Cash flows from (used for) financing activities Cash received from sale of common stock $187,500 Cash paid for dividends (91,200) Net cash flow from financing activities 96,300 $23,060 585,920 $608,980 Net increase in cash Cash balance, January 1, 20Y8 Cash balance, December 31, 20Y8 Balance Sheet Using the information on above, complete the following comparative balance sheet. Championship Boxing, Inc. Comparative Balance Sheet December 31, 20Y8 and 20Y7 20Y8 20Y7 Assets 608,980 Cash $585,920 205,580 Accounts receivable (net) 230,970 651,770 618,320 230,000 Investments 0 Evaluating Performance Homework Print Item Calculator 651,770 Inventories 618,320 230,000V 326,000 Land Equipment Accumulated depreciation-equipment Total assets 553,120 -148,000 2,044,940 705,120 (166,400) 2,356,440 Liabilities 432,930 Accounts payable (merchandise creditors) Accrued expenses payable (operating expenses) Dividends payable Total liabilities $391,800 53,620 41,150 24,000 V 19,200 464,620 $498,080 Stockholders' Equity 150,000 417,500 1,290,860 Common stock, $4 par Paid-in capital in excess of par Retained earnings Total stockholders' eau 100,000 280,000 -193,460 X $1,858,360 Evaluating Performance HomeworkCalculator Print Item Liabilities 32,930 Accounts payable (merchandise creditors) Accrued expenses payable (operating expenses) Dividends payable Total liabilities $391,800 53,620 41,150 24,000 V 19,200 464,620 $498,080 Stockholders Equity 150,000 417,500 1,290,860 Common stock, $4 par $100,000 Paid-in capital in excess of par 280,000 Reaied earnings 193,460 X $1,858,360 Total stockholders' equity 2,356,440V Total liabilities and stockholders' equity Feedback Check My Work Review the relationships between the beginning and ending balance sheet amounts, and their effect on the statement of cash flows