Chapter 14: Q31E (page 782)

Using a spreadsheet to prepare the statement of cash flows—indirect method Use the Boost Plus, Inc. data in Exercise E14-21 to prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activities by the indirect method.

Expert verified

Net increase/(decrease) in cash is $26,000.

Step by step solution

Boost Plus Inc. Spreadsheet for statement of cash flows Year ended December 31, 2018
Panel A-Balance Sheet	Balance 31/12/2017	Transaction Analysis		Balance 31/12/2018
		Debit	Credit
Cash	$13,000			$39,000
Account receivables	$61,000.00		$15,000.00	$46,000
Land	$102,000.00		$20,000.00	$82,000
Plant Assets	$90,000	$124,000		$214,000
Accumulated Depreciation	($34,000)		($27,000)	($61,000)
Merchandise Inventory	$88,000	$6,000		$94,000
Total Assets	$320,000	$130,000	$8,000	$414,000

Accounts Payable	$15,000		$17,000	$32,000
Accrued Liabilities	$20,000	$8,000		$12,000
Common Stock	$4,000		$36,000	$40,000
Notes Payable (Long-Term)	$15,000		$1,000	$16,000
Retained Earnings	$266,000		$48,000	$314,000
Total Liabilities and Shareholder’s Equity	$320,000	$8,000	$102000	$414,000

Panel B- Statement of Cash Flows
Cash Flows from Operating Activities
Net Income		$53,000
Adjustments to reconcile Net Income to Net cash provided by Operating Activities:
Depreciating Expense		$27,000
Decrease in account receivables		$15,000
Increase in merchandise inventory			$6,000
Increase in account payable		$17,000
Decrease in accrued liability			$8,000
Net cash provided/ (used) in operating activities
Cash flow from Investing Activities:
Purchase of plant			$108,000
Sale of land		$20,000
Net cash provided/ (used) in Investing activities
Cash flow from Financing Activities:
Issuance of common stock		$36,000
Payment of notes payable			$15,000
Dividend paid			$5,000
Net cash provided/ (used) in financing activities
Net increase/ (decrease) in cash			$26,000
		$168,000	$168,000

Boost Plus Inc. Statement of Cash Flows (Partial) For the year ended December 31, 2018
Non-cash Investing and financing activities
Acquisition of land by issuing long-term notes payable	$16,000
Total Non-cash Investing and financing activities	$16,000

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ROUSE EXERCISE EQUIPMENT, INC. Income statement Year ended December 31, 2018
Net sales revenue	\(713,000
Cost of goods sold	342,000
Gross Profit	371,000
Operating expense:
Depreciation expense	54,000
Other operatin expenses	210,000
Net Income	\)107,000

ROUSE EXERCISE EQUIPMENT, INC. Comparative Balance sheet December 31, 2018 and 2017
	2018	2017
Assets
Current assets:
Cash	17,000	16,000
Accounts receivable	57,000	46,000
Merchandise inventory	79,000	90,000
Long term assets:
Plant assets	260,500	216,400
Accumulated depreciation-Plant assets	(38,500)	(32,400)
Investments	96,000	73,000
Total assets	\(471,000	\)409,000

Liabilities
Current liabilities
Accounts payable	72,000	71,000
Salaries payable	3,000	5,000
Long-term liabilities
Notes payable	61,000	69,000
Total liabilities	136,000	145,000

Stockholder’s equity
Common stock, no par	45,000	34,000
Retained earnings	290,000	230,000
Total stockholder’s equity	335,000	264,000
Total liabilities and stockholder’s equity	\(471,000	\)409,000