Boca
Inc.
|
||||||||
Balance
Sheets
|
||||||||
December
31
|
||||||||
Assets
|
2018
|
2017
|
||||||
Cash
|
40,800
|
48,400
|
||||||
Accounts
Receivable
|
87,800
|
38,000
|
||||||
Inventory
|
112,500
|
102,850
|
||||||
Prepaid
Expenses
|
28,400
|
26,000
|
||||||
Long-term
Investments
|
138,000
|
109,000
|
||||||
Plant
Assets
|
367,000
|
242,500
|
||||||
Accumulated
depreciation
|
(50,000)
|
(52,000)
|
||||||
Total
|
724,500
|
514,750
|
||||||
Liabilities
and Stockholders' Equity
|
||||||||
Accounts
Payable
|
72,000
|
67,300
|
||||||
Accrued
Expenses Payable
|
13,500
|
21,000
|
||||||
Dividends
Payable
|
3,000
|
-
|
||||||
Bonds
Payable
|
170,000
|
146,000
|
||||||
Common
Stock
|
262,000
|
175,000
|
||||||
Retained
Earnings
|
204,000
|
105,450
|
||||||
Total
|
724,500
|
514,750
|
||||||
Additional
Information:
|
||||||||
1. Old
plant assets having an original cost of $57,500 and accumulated depreciation
of $48,500 were sold for $1,500 cash.
|
||||||||
2. A new
plant asset was purchased directly in exchange for common stock valued at
$42,000.
|
||||||||
3. New
bonds were issued at par for $60,000.
|
||||||||
4. 2018
Net income was $154,480.
|
||||||||
5. A
$1,000 prior period adjustment was recorded in 2018 to correct an
understatement of depreciation in 2015. The 2017 balance sheet is
appropriately restated.
|
||||||||
6. The
increase in Long-term Investments was due to a purchase of investments.
|
||||||||
Required
|
||||||||
1.
Prepare a 2018 statement of cash flows using the indirect method.
|
||||||||
BOCA INC.
| ||
CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31
| ||
$
|
$
| |
CASH FLOW FROM OPERATING ACTIVITIES
| ||
Net Profit /Operating Profit Before Tax &Working Capital Changes
|
1,54,480.00
| |
Adjustment For non cash items and working capital changes:
| ||
Loss on sale on old plant [(57500 - 48500) - 1500]
|
7,500.00
| |
Depreciation [50000 - (52000-48500)]
|
46,500.00
| |
Increase in Accounts receivable
|
(49,800.00)
| |
Increase in inventory
|
(9,650.00)
| |
Increase in prepaid expenses
|
(2,400.00)
| |
Increase in Accounts payable
|
4,700.00
| |
Decrease in Accrues Expenses payable
|
(7,500.00)
| |
Increase in Dividend payable
|
3,000.00
| |
NET CASH FROM OPERATING ACTIVITIES (A)
|
1,46,830.00
| |
CASH FLOW FROM INVESTING ACTIVITIES
| ||
Purchase of Plant assets (367000 - [(242500-57500)+42000]
|
(1,40,000.00)
| |
Sale of old Plant
|
1,500.00
| |
Purchase of Long term investments
|
(29,000.00)
| |
NET CASH FROM INVESTING ACTIVITIES (B)
|
(1,67,500.00)
| |
CASH FLOW FROM FINANCING ACTIVITIES
| ||
Issue of new Bond
|
60,000.00
| |
Retirement of old Bond (146000+60000-170000)
|
(36,000.00)
| |
Issue of new shares of common stock (87000 - 42000)
|
45,000.00
| |
Payment of dividend [204000 - (105450+154480)]
|
(55,930.00)
| |
NET CASH FROM FINANCING ACTIVITIES (C)
|
13,070.00
| |
NET CHANGES IN CASH AND CASH EQUIVALENTS (A+B+C)
|
(7,600.00)
| |
ADD: OPENING CASH AND CASH EQUIVALENTS
|
48,400.00
| |
CLOSING CASH AND CASH EQUIVALENTS
|
40,800.00
| |
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