Read COMP 3 then answer the instructions for Part 1 and Part 2.

-The answers should be on the same PDF file.

-Include the T accounts for each transaction (to the side of the page)

-Make sure that Cash flows using Direct Method and Indirect Method ADD UP ( meaning same ending numbers).

-Include Disclosures for Non-Cash affecting transactions e.g. Long Term Notes Payable.

ACCTG331 S2017 Student Name:____________________ Comprehensive Problem 3 (Cash Flow Statements) ID:______________________________ Due Date: Thursday, March 9, 2017 Part 1. Indirect Method (13 points) The comparative balance sheets for BYD Corporation show the following information. December 31 2016 2015 $70,350 $56,000 Cash 56,700 42,000 Accounts receivable Inventory 36,400 28,000 Investments 0 14,000 Building 0 105,000 Equipment 294,000 84,000 Patent 14,700 21,000 Totals $472,150 $350,000 Allowance for doubtful accounts Accumulated depreciation on equipment Accumulated depreciation on building Accounts payable Dividends payable Notes payable, shortterm (nontrade) Longterm notes payable Common stock Retained earnings Totals $13,125 8,400 0 21,000 0 26,250 184,800 131,950 86,625 $472,150 $17,500 21,000 31,500 14,000 24,500 35,000 84,000 91,000 31,500 $350,000 Additional data related to 2016 are as follows: 1. 2. 3. 4. Equipment that had cost $37,800 and was 80% depreciated at time of disposal was sold for $9,450. $40,950 of the longterm note payable was paid by issuing common stock. Cash dividends $24,500 were paid. On January 1, 2016, the building was completely destroyed by a flood. Insurance proceeds on the building were $110,250 (after netting $8,820 taxes). 5. Investments (availableforsale) were sold at $6,300 above their cost. The company has made similar sales and investments in the past. 6. A longterm note for $141,750 was issued for the acquisition of equipment. 1 Instructions: Prepare a statement of cash flows using the indirect method. 2 Part 2. Direct Method (7 points) Cougar Company has not yet prepared a formal statement of cash flows for the 2016 fiscal year. Comparative balance sheets as of December 31, 2015, and 2016, and a statement of income and retained earnings for the year ended December 31, 2016, are presented below. COUGAR COMPANY Statement of Income and Retained Earnings For The Year Ended December 31, 2016 ($000 Omitted) Sales $10,000 Expenses Cost of goods sold $1,800 Salaries and benefits 1,200 Heat, light, and power 600 Depreciation 252 Property taxes 350 Patent amortization 15 Miscellaneous expenses 50 Interest 250 4,517 Income before income taxes 5,483 Income taxes 2,193 Net income 3,290 Retained earnings January 1, 2016 550 3,840 Stock dividend declared and issued 340 Retained earnings December 31, 2016 $3,500 3 COUGAR COMPANY Comparative Balance Sheet December 31 ($000 Omitted) Assets Current assets Cash U.S. Treasury notes (Availableforsale) Accounts receivable Inventory Total current assets Longterm assets Land Buildings and equipment Accumulated depreciation Patents (less amortization) Total longterm assets Total assets 2016 Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Notes payable Total current liabilities Longterm notes payable due 2016 Total liabilities Stockholders' equity Common stock outstanding Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 4 2015 $2,729 105 765 748 4,347 $1,050 350 450 650 2,500 450 1,680 (672) 105 1,563 $5,910 100 700 (420) 120 500 $3,000 $522 48 250 1,440 400 1,840 $870 80 250 1,200 400 1,600 1,190 3,500 4,690 $5,910 850 550 1,400 $3,000 Instructions: Prepare a statement of cash flows using the direct method. Changes in accounts receivable and in accounts payable relate to sales and cost of sales. 5