Question
RUSSELL COMPANYComparative Balance SheetDec. 31, 2017Dec. 31, 2016AssetsCash$ 38,000$13,000Accounts receivable18,00014,000Inventory25,00015,000Prepaid insurance7,0009,000Stock investments-0-18,000Equipment60,00030,000Accumulated depreciationequipment (18,000)(14,000)Total assets$130,000$85,000Liabilities and Stockholders' EquityAccounts payable$ 25,000$ 7,000Bonds payable37,00045,000Common stock40,00023,000Retained earnings 28,000
RUSSELL COMPANYComparative Balance SheetDec. 31, 2017Dec. 31, 2016AssetsCash$ 38,000$13,000Accounts receivable18,00014,000Inventory25,00015,000Prepaid insurance7,0009,000Stock investments-0-18,000Equipment60,00030,000Accumulated depreciationequipment (18,000)(14,000)Total assets$130,000$85,000Liabilities and Stockholders' EquityAccounts payable$ 25,000$ 7,000Bonds payable37,00045,000Common stock40,00023,000Retained earnings 28,000 10,000Total liabilities and stockholders' equity$130,000$85,000Additional information:1. Net income for the year ending December 31, 2017, was $30,000.2. Depreciation expense during 2017 was $4,0003. Cash dividends of $12,000 were declared and paid during the year. 4. Stock investments that had a book value of $18,000 were sold for $13,000. Hint: the loss is therefore $5,000 and needs to be added back to net income as a line item adjustment in converting Net Income to Cash Flow, but do Not forget to include the $13,000 as a line item in the Investing Activities section, because it is $13,000 of cash provided from the sale of investments. In addition, be sure to closely review my comments E12-7 in the Chapter 12 module.InstructionsPrepare a statement of cash flows for the year ended December 31, 2017, using the indirect method.
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