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The comparative balance sheets for 2016 and 2015 and the income statement for 2016 are given below for Arduous Company. Additional information from Arduouss accounting

The comparative balance sheets for 2016 and 2015 and the income statement for 2016 are given below for Arduous Company. Additional information from Arduouss accounting records is provided also.

ARDUOUS COMPANY Comparative Balance Sheets December 31, 2016 and 2015 ($ in millions)
2016 2015
Assets
Cash $ 128 $ 87
Accounts receivable 196 206
Investment revenue receivable 14 10
Inventory 212 206
Prepaid insurance 12 19
Long-term investment 176 131
Land 208 156
Buildings and equipment 418 412
Less: Accumulated depreciation (103) (132)
Patent 36 40
$ 1,297 $ 1,135
Liabilities
Accounts payable $ 56 $ 77
Salaries payable 14 22
Bond interest payable 16 10
Income tax payable 18 21
Deferred income tax liability 23 14
Notes payable 26 0
Lease liability 88 0
Bonds payable 221 287
Less: Discount on bonds (28) (30)
Shareholders Equity
Common stock 446 416
Paid-in capitalexcess of par 106 91
Preferred stock 81 0
Retained earnings 245 227
Less: Treasury stock (15) 0
$ 1,297 $ 1,135

ARDUOUS COMPANY Income Statement For Year Ended December 31, 2016 ($ in millions)
Revenues and gain:
Sales revenue $ 452
Investment revenue 20
Gain on sale of treasury bills 4 $ 476
Expenses and loss:
Cost of goods sold 186
Salaries expense 79
Depreciation expense 12
Patent amortization expense 4
Insurance expense 13
Bond interest expense 34
Loss on machine damage 27
Income tax expense 42 397
Net income $ 79

Additional information from the accounting records:
a.

Investment revenue includes Arduous Companys $14 million share of the net income of Demur Company, an equity method investee.

b.

Treasury bills were sold during 2016 at a gain of $4 million. Arduous Company classifies its investments in Treasury bills as cash equivalents.

c.

A machine originally costing $82 million that was one-half depreciated was rendered unusable by a flood. Most major components of the machine were unharmed and were sold for $14 million.

d.

Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $9 million.

e.

The preferred stock of Tory Corporation was purchased for $31 million as a long-term investment.

f.

Land costing $52 million was acquired by issuing $26 million cash and a 12%, four-year, $26 million note payable to the seller.

g.

The right to use a building was acquired with a 15-year lease agreement; present value of lease payments, $88 million.

h.

$66 million of bonds were retired at maturity.

i. In February, Arduous issued a 6% stock dividend (5 million shares). The market price of the $5 par value common stock was $7.50 per share at that time.
j.

In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $15 million.

Required:

Prepare the statement of cash flows for Arduous Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Do not round your intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10.).)

**Statement of cashflow must be in the following format: !!!

Cash flows from operating activities:

Net income

Adjustments for noncash effects:

Depreciation expense:

Patent amortization expense:

Amortization of discount:

Loss on machine damage:

Changes in operating assets and liabilities:

Decrease in accounts receivable

Increase in investment revenue receivable

Increase in investment due to equity method income

Decrease in prepaid insuranceIncrease in inventory

Decrease in accounts payable

Decrease in salaries payable

Increase in interest payable

Decrease in income tax payable

Increase in deferred tax liability

Net cash flows from operating activities:

Cash flows from financing activities:

Retirement of bonds payable

Sale of preferred stock

Payment of cash dividends

Purchase of treasury stock

Net cash flows from investing activities:

Cash flows from financing activities:

Retirement of bonds payable

Sale of preferred stock

Payment of cash dividends

Purchase of treasury stock

Net cash flows from financing activities:

Net increase in cash:

Cash balance, January 1

Cash balance, December 31

Noncash investing and financing activities:

Acquired building with lease

Acquired land with cash and note

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