Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following information was taken from Lamberson Company's accounting records: Account Balances Account Titles January 1, 2016 December 31, 2016 Debits Cash $ 1,400 $

The following information was taken from Lamberson Company's accounting records:

Account Balances
Account TitlesJanuary 1,
2016
December 31,
2016
Debits
Cash$ 1,400$ 2,400
Accounts Receivable (net)2,8002,690
Marketable Securities (at cost)1,7003,000
Allowance for Change in Value500800
Inventories8,1007,910
Prepaid Items1,3001,710
Investments (long-term)7,0005,400
Land15,00015,000
Buildings and Equipment32,00046,200
Discount on Bonds Payable290
$69,800$85,400
Credits
Accumulated Depreciation$16,000$16,400
Accounts Payable3,8004,150
Income Taxes Payable2,4002,504
Wages Payable1,100650
Interest Payable400
Note Payable (long-term)3,500
12% Bonds Payable10,000
Deferred Taxes Payable8001,196
Convertible Preferred Stock, $100 par9,000
Common Stock, $10 par14,00021,500
Additional Paid-in Capital8,70013,700
Unrealized Increase in Value of Marketable Securities500800
Retained Earnings10,00014,100
$69,800$85,400

Additional information for the year:

  1. Sales$ 39,930
    Cost of goods sold(19,890)
    Depreciation expense(2,100)
    Wages expense(11,000)
    Other operating expenses(1,000)
    Bond interest expense(410)
    Dividend revenue820
    Gain on sale of investments700
    Loss on sale of equipment(200)
    Income tax expense(2,050)
    Net income$ 4,800
  2. Dividends declared and paid totaled $700.
  3. On January 1, 2016, convertible preferred stock that had originally been issued at par value were converted into 500 shares of common stock. The book value method was used to account for the conversion.
  4. Long-term nonmarketable investments that cost $1,600 were sold for $2,300.
  5. The long-term note payable was paid by issuing 250 shares of common stock at the beginning of the year.
  6. Equipment with a cost of $2,000 and a book value of $300 was sold for $100. The company uses one Accumulated Depreciation account for all depreciable assets.
  7. Equipment was purchased at a cost of $16,200.
  8. The 12% bonds payable were issued on August 31, 2016, at 97. They mature on August 31, 2026. The company uses the straight-line method to amortize the discount.
  9. Taxable income was less than pretax accounting income, resulting in a $396 increase in deferred taxes payable.
  10. Short-term marketable securities were purchased at a cost of $1,300. The portfolio was increased by $300 to a $3,800 fair value at year-end by adjusting the related allowance account.

Required

  1. Prepare a spreadsheet to support Lamberson Company's 2016 statement of cash flows. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.
    LAMBERSON COMPANY
    Cash Flows Worksheet
    For Year Ended December 31, 2016
    BalancesWorksheet Entries
    Account Titles01/01/201612/31/2016ChangeDebitCredit
    Debits
    Cash1,4002,400
    Noncash Accounts:
    Accounts Receivable2,8002,690
    Marketable Securities1,7003,000
    Allow for Change in Value500800
    Inventories8,1007,910
    Prepaid Items1,3001,710
    Investments (long-term)7,0005,400
    Land15,00015,000
    Buildings and Equipment32,00046,200
    Discount on Bonds Payable290
    Totals69,80085,400
    Credits
    Accumulated Depreciation16,00016,400
    Accounts Payable3,8004,150
    Income taxes Payable2,4002,504
    Wages Payable1,100650
    Interest Payable400
    Notes Payable (long-term)3,500
    12% Bonds Payable10,000
    Deferred Income Taxes8001,196
    Convertible Preferred Stock9,000
    Common Stock, $10 par14,00021,500
    Additional Paid-in Capital8,70013,700
    Unrealized Increase in Value of Marketable Securities500800
    Retained Earnings10,00014,100
    Totals69,80085,400
    Worksheet Entries
    DebitCredit
    Cash Flows from Operating Activities:
    Net income
    Add: Depreciation expense
    Add: Loss from sale of building
    Cash Flows from Investing Activities:
    Cash Flows from Financing Activities:
    Investing and Financing Activities Not Affecting Cash:
    Totals
  2. Prepare the statement of cash flows.

    LAMBERSON COMPANY
    Statement of Cash Flows
    For Year Ended December 31, 2016
    Operating Activities:
    Adjustment for noncash income items:
    Adjustments for cash flow effects from working capital items:
    Net cash provided by operating activities
    Investing Activities:
    Net cash used for investing activities
    Financing Activities:
    Net cash provided by financing activities
    Cash, January 1, 2016
    Cash, December 31, 2016
  3. Compute the cash flow from operations to sales ratio and the profit margin ratio for 2016. Round your answers to one decimal place.
    1. Cash flows from operations ratio :
    2. Profit margin:

Step by Step Solution

3.43 Rating (172 Votes )

There are 3 Steps involved in it

Step: 1

1 Prepare a spreadsheet to support L Companys 2016 statement of cash flows A B D E F 1 Account Title... 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

Introduction to Accounting An Integrated Approach

Authors: Penne Ainsworth, Dan Deines

6th edition

78136601, 978-0078136603

More Books

Students also viewed these Accounting questions

Question

What is the difference between systems analysis and systems design?

Answered: 1 week ago

Question

Draw a picture consisting parts of monocot leaf

Answered: 1 week ago