he comparative balance sheets of Posner Company, for Years 1 and 2 ended December 31, appear below in condensed form:   Year 2 Year 1 Assets     Cash $ 53,000    $50,000    Accounts receivable (net) 37,000    48,000    Inventories 108,500    100,000    Investments - 70,000    Equipment 573,200    450,000    Accumulated depreciation—equipment (142,000)    (176,000)    Total assets $629,700    $542,000          Liabilities and Stockholders' Equity     Accounts payable $ 62,500    $43,800    Bonds payable, due Year 2 - 100,000    Common stock, $10 par 325,000    285,000    Paid-in capital in excess of par—common stock 80,000    55,000    Retained earnings 162,200    58,200    Total liabilities and stockholders' equity $629,700    $542,000      The income statement for the current year is as follows: Sales     $625,700 Cost of goods sold     340,000 Gross profit     $285,700 Operating expenses:       Depreciation expense $ 26,000     Other operating expenses 68,000        Total operating expenses     94,000 Income from operations     $191,700 Other income:       Gain on sale of investment $4,000     Other expense:       Interest expense 6,000   (2,000) Income before income tax     $189,700 Income tax     60,700 Net income     $129,000   Additional data for the current year are as follows: Fully depreciated equipment costing $60,000 was scrapped, no salvage, and new equipment was purchased for $183,200. Bonds payable for $100,000 were retired by payment at their face amount. 5,000 shares of common stock were issued at $13 for cash. Cash dividends declared and paid, $25,000. Prepare a statement of cash flow, using the indirect method of reporting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. Posner Company Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities:     Cash from sale of investments  $   Adjustments to reconcile net income to net cash flow from operating activities:     Cash paid for dividends      Gain on sale of investments      Changes in current operating assets and liabilities:                       Net cash flow from operating activities   $ Cash flows from investing activities:       $         Net cash flow used for investing activities     Cash flows from financing activities:       $               Net cash flow used for financing activities         $ Cash at the beginning of the year

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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he comparative balance sheets of Posner Company, for Years 1 and 2 ended December 31, appear below in condensed form:

  Year 2 Year 1
Assets    
Cash $ 53,000    $50,000   
Accounts receivable (net) 37,000    48,000   
Inventories 108,500    100,000   
Investments - 70,000   
Equipment 573,200    450,000   
Accumulated depreciation—equipment (142,000)    (176,000)   
Total assets $629,700    $542,000   
     
Liabilities and Stockholders' Equity    
Accounts payable $ 62,500    $43,800   
Bonds payable, due Year 2 - 100,000   
Common stock, $10 par 325,000    285,000   
Paid-in capital in excess of par—common stock 80,000    55,000   
Retained earnings 162,200    58,200   
Total liabilities and stockholders' equity $629,700    $542,000   

 

The income statement for the current year is as follows:

Sales     $625,700
Cost of goods sold     340,000
Gross profit     $285,700
Operating expenses:      
Depreciation expense $ 26,000    
Other operating expenses 68,000    
   Total operating expenses     94,000
Income from operations     $191,700
Other income:      
Gain on sale of investment $4,000    
Other expense:      
Interest expense 6,000   (2,000)
Income before income tax     $189,700
Income tax     60,700
Net income     $129,000

 

Additional data for the current year are as follows:

  1. Fully depreciated equipment costing $60,000 was scrapped, no salvage, and new equipment was purchased for $183,200.
  2. Bonds payable for $100,000 were retired by payment at their face amount.
  3. 5,000 shares of common stock were issued at $13 for cash.
  4. Cash dividends declared and paid, $25,000.

Prepare a statement of cash flow, using the indirect method of reporting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Posner Company
Statement of Cash Flows
For the Year Ended December 31, Year 2
Cash flows from operating activities:    
Cash from sale of investments  $  
Adjustments to reconcile net income to net cash flow from operating activities:    
Cash paid for dividends     
Gain on sale of investments     
Changes in current operating assets and liabilities:    
     
     
     
Net cash flow from operating activities   $
Cash flows from investing activities:    
  $  
     
Net cash flow used for investing activities    
Cash flows from financing activities:    
  $  
     
     
Net cash flow used for financing activities    
    $
Cash at the beginning of the year    
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