Practice Problems

Condensed financial data of Bing Company appear below:

BING COMPANY

Comparative Balance Sheet

December 31

2017 2016

Assets

Cash $ 70,000 $ 35,000

Accounts receivable 82,000 53,000

Inventories 120,000 132,000

Prepaid expenses 19,000 25,000

Investments 80,000 65,000

Plant assets 310,000 250,000

Accumulated depreciation (65,000) (60,000)

Total $616,000 $500,000

Liabilities and Stockholders' Equity

Accounts payable $ 95,000 $ 75,000

Accrued expenses payable 22,000 24,000

Bonds payable 120,000 150,000

Common stock 245,000 170,000

Retained earnings 134,000 81,000

Total $616,000 $500,000

BING COMPANY

Income Statement

For the Year Ended December 31, 2017

Sales $480,000

Less:

Cost of goods sold $290,000

Operating expenses (includes depreciation expense) 77,000

Income taxes 15,000

Interest expense 13,000

Loss on sale of plant assets 3,000 398,000

Net income $ 82,000

Additional information:

1. Old plant assets costing $25,000 were sold when book value was $13,000.

2. Bonds with a face value of $30,000 were converted into $30,000 of common stock.

Instructions

1. Compute cash receipts from customers.

2. Compute cash payments to suppliers.

3. Compute cash payments for operating expenses.

3. Compute cash payments for income taxes.

4. Compute cash payments for interest.

5. Prepare a statement of cash flows for the year using the indirect method on the next page.

Check digit: Cash flows from operating activities is $109,000. If you add up all your answers above, you should get that number.