Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The 2017 and 2016 balance sheets of WalkerWalker Corporation follow. The 2017 income statement is also provided. WalkerWalker had no noncash investing and financing transactions

The 2017 and 2016 balance sheets of WalkerWalker Corporation follow. The 2017 income statement is also provided. WalkerWalker had no noncash investing and financing transactions during 2017. During the year, the company sold equipment for $15,700, which had originally cost $12,900 and had a book value of $11,300. The company did not issue any notes payable during the year but did issue common stock for $27,000. The company purchased plant assets and long-term investments with cash.

Walker Corporation

Income Statement

For the Year Ended December 31, 2017

Sales revenues

$345,000

Less: Cost of goods sold

77,000

Gross profit

$268,000

Less operating expenses:

Salaries and wages expense

$27,000

Depreciation expense

4,300

Other operating expenses

14,000

Total operating expenses

45,300

Operating income

$222,700

Plus other income and less other expenses:

Interest expense

9,000

Gain on sale of PP&E

4,400

Total other income and expenses

4,600

Income before income taxes

218,100

Less: Income tax expense

36,300

Net income

$181,800

Walker Corporation

Comparative Balance Sheets

December 31, 2017 and 2016

Assets

2017

2016

Current assets:

Cash

$47,500

$23,500

Accounts receivable

32,000

29,800

Inventory

86,400

94,800

Prepaid insurance

3,100

2,500

Total current assets

$169,000

$150,600

Property, plant, and equipment

150,000

139,000

Less: Accumulated depreciation

(30,000)

(27,300)

Investments

112,000

0

Total assets

$401,000

$262,300

Liabilities

Current liabilities:

Accounts payable

$33,500

$36,600

Wages payable

3,100

7,600

Interest payable

1,900

0

Income taxes payable

6,000

0

Other accrued expenses payable

18,900

22,900

Total current liablities

$63,400

$67,100

Long-term liabilities

71,000

113,000

Total liabilities

$134,400

$180,100

Stockholders' equity

Common stock

$103,000

$76,000

Retained earnings

163,600

6,200

Total stockholders' equity

$266,600

$82,200

Total liabilities and equity

$401,000

$262,300

Requirements

1. Prepare the statement of cash flows for WalkerWalker Corporation for 2017 using the indirect method.

2. Evaluate the company's cash flows for the year. Discuss each of the categories of cash flows in your response.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Forensic And Investigative Accounting

Authors: D. Larry Crumbley, Lester E. Heitger, Stevenson Smith

5th Edition

0808026879, 9780808026877

More Books

Students also viewed these Accounting questions