Statement of cash flows—indirect method
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The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is shown as follows:
Dec. 31, 2016 Dec. 31, 2015
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 625,760 $ 585,920
Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227,840 208,960
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641,760 617,120
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 240,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328,000 0
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705,120 553,120
Accumulated depreciation—equipment . . . . . . . . . . . . . . . . . . . . . . . . . . (166,400) (148,000) Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,362,080 $2,057,120
Liabilities and Stockholders’ Equity
|
Accounts payable (merchandise creditors) . . . . . . . . . . . . . . . . . . . . . . . . |
$ 424,480 |
$ 404,960 |
|
|
Accrued expenses payable (operating expenses) . . . . . . . . . . . . . . . . . . |
42,240 |
52,640 |
|
|
Dividends payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
24,000 |
19,200 |
|
|
Common stock, $4 par . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
150,000 |
100,000 |
|
|
Paid-in capital: Excess of issue price over par—common stock . . . . . . |
417,500 |
280,000 |
|
|
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
1,303,860 |
1,200,320 |
|
|
Total liabilities and stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . |
$2,362,080 |
$2,057,120 |
Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows:
a. The investments were sold for $280,000 cash.
b. Equipment and land were acquired for cash.
c. There were no disposals of equipment during the year.
d. The common stock was issued for cash.
e. There was a $199,540 credit to Retained Earnings for net income.
f. There was a $96,000 debit to Retained Earnings for cash dividends declared.
Instructions
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
