Question 4: Statement of Financial Position & Cash Flow (23

marks)

Amerac Inc. had the following statement of financial position at the end of

operations for 2016:

Amerac Inc.

Statement of Financial Position

December 31, 2016

Cash $ 25,000 Accounts Payable $ 32,000

Accounts receivable 23,000 Bonds Payable 50,000

FV-NI investments 30,000 Common Shares 90,000

Equipment (net) 82,000 Retained Earnings 38,000

Land 50,000 __________

$210,000 $210,000

During 2017, the following occurred:

1. Amerac liquidated its FV-NI portfolio as a loss of $5,000.

2. A parcel of land was purchased for $33,000

3. An additional $25,000 worth of common shares was issued.

4. Dividends totaling $10,000 were declared and paid to shareholders.

5. Net income for 2017 was $40,000, including $10,000 in depreciation expense.

6. Land was purchased through the issuance of $30,000 in additional bonds.

7. At December 31, 2017, Cash was $76,000; Accounts Receivable was $44,000; and Accounts Payable was $42,000.

Required:

a) Prepare statement of financial position as it would appear at December 31, 2017.

b) Prepare statement of cash flows for the year ended December 31, 2017 using the indirect method. Assume dividends paid are treated as financing activities. Footnote any statements that should be disclosed on the cash flow at the bottom.