Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

P1-34A Preparing the statement of cash flows-indirect method with non-cash transactions The 2016 income statement and comparative balance sheet of McKnight, Inc. follow: MCKNIGHT, INC.

image text in transcribed
image text in transcribed
P1-34A Preparing the statement of cash flows-indirect method with non-cash transactions The 2016 income statement and comparative balance sheet of McKnight, Inc. follow: MCKNIGHT, INC. Income Statement Year Ended December 31, 2016 $ 441,000 Sales Revenue 202,200 Cost of Goods Sold 238,800 Gross Profit Operating Expenses: $ 76,400 Salaries Expense 14,200 Depreciation Expense-Plant Assets 10,500 Other Operating Expenses 101,100 Total Operating Expenses 137,700 Operating Income Other Revenues and (Expenses): 8,800 Interest Revenue (21,600) Interest Expense (12,800) Total Other Revenues and (Expenses) 124,900 Net Income Before Income Taxes 19,500 Income Tax Expense $ 105,400 Net Income MCKNIGHT, INC. Comparative Balance Sheet December 31, 2016 and 2015 2016 2015 Assets Current Assets: Cash $ 26,400 $ 15,100 Accounts Receivable Merchandise Inventory 26,700 25,200 79,700 91,600 Long-term Assets Plant Assets 118,510 110.310 Accumulated Depreciation-Plant Assets (19,610) (15,610) Land 34.800 $ 266,500 7,000 Total Assets $ 233,600 Liabilities Current Liabilities: Accounts Payable $ 30,500 $35.100 Accrued Liabilities 28,200 30,100 Long-term Liabilities Notes Payable 73,000 106,000 Total Liabilities 136,300 166,600 Stockholders' Equity Common Stock, no par 88, 100 64,700 End Retained Earnings 42,100 2,300 Total Stockholders' Equity 130,200 67,000 $ 266.500 Total Liabilities and Stockholders' Equity $ 233,600 Additionally, McKnight purchased land of $27,800 by financing it 100% with long-term notes payable during 2016. During the year, there were no sales of land, no retirements of stock, and no treasury stock transactions. A plant asser was disposed of for $0. The cost and the accumulated depreciation of the disposed asset was $10,200. The plant acquisition was for cash. Requirements 1. Prepare the 2016 statement of cash flows, formatting operating activities by the indirect method. 2. How will what you learned in this problem help you 'evaluate an investment

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

Financial Accounting

Authors: David Spiceland

6th Edition

1260786528, 9781260786521

More Books

Students also viewed these Accounting questions

Question

5. Give examples of binary thinking.

Answered: 1 week ago