Cardinal Company uses the indirect method to prepare its statement of cash flows

Question

Using the following information, complete the worksheet for the year ended December 31, 2016.

- Net Income for the year ended December 31,2016 was $49,000
- Depreciation expense for 2016 was $12,000
- During 2016, plant assets with a book value of $10,000 (cost $10,000 and accumulated depreciation $0 ) were sold for $14,000
- Plant assets were acquired for $52,000 cash
- Issued common stock for $28,000
- Issued long-term notes payable for $34,000
- Repaid long-term notes payable for $40,000
- Purchased treasury stock for 3,000
- Paid dividends of $10,000

Cardinal Company
Spreadsheet for Statement of Cash Flows
Year Ended December 31, 2016
Balance

12/31/15 Transaction Analysis

Debit Transaction Analysis

Credit Balance

12/31/16
Panel A-Balance Sheet:
Cash $18,000 $21,000
Accounts Receivable 35,000 31,000
Merchandise Inventory 25,000 53,000
Plant Assets 70,000 112,000
Accumulated Depreciation-Plant Assets (20,000 ) (32,000 )
Total Assets $128,000 $185,000

Accounts Payable 6,000 4,000
Accrued Liabilities 1,000 2,000
Long-term Notes Payable 50,000 44,000
Common Stock 2,000 30,000
Retained Earnings 74,000 113,000
Treasury Stock (5,000 ) (8,000 )
Total Liabilities and Stockholder's Equity $128,000 $185,000

Panel B-Statement of Cash Flows:
Cash Flows from Operating Activities:
Net Income
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation Expense-Plant Assets
Gain on Disposal of Plant Assets
Increase/Decrease in Accounts Receivable
Increase/Decrease in Merchandise Inventory
Increase/Decrease in Accounts Payable
Increase/Decrease in Accrued Liabilities
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Cash Payment for Acquisition of Plant Assets
Cash Receipt from Disposal of Plant Assets
Net Cash Used for Investing Activities
Cash Flows from Financing Activities:
Cash Receipt from Issuance of Notes Payable
Cash Payment of Notes Payable
Cash Receipt from Issuance of Common Stock
Cash Payment for Purchase of Treasury Stock
Cash Payment of Dividends
Net Cash Provided by Financing Activities

Net Increase (Decrease) in Cash
Total

What will be an ideal response

Answer 1

Cardinal Company
Spreadsheet for Statement of Cash Flows
Year Ended December 31, 2016
Balance

12/31/15 Transaction Analysis

Debit Transaction Analysis

Credit Balance

12/31/16
Panel A—Balance Sheet:
Cash $18,000 3,000 $21,000
Accounts Receivable 35,000 4,000 31,000
Merchandise Inventory 25,000 28,000 53,000
Plant Assets 70,000 52,000 10,000 112,000
Accumulated Depreciation—Plant Assets (20,000 ) 12,000 (32,000 )
Total Assets $128,000 $185,000

Accounts Payable 6,000 2,000 4,000
Accrued Liabilities 1,000 1,000 2,000
Long-term Notes Payable 50,000 40,000 34,000 44,000
Common Stock 2,000 28,000 30,000
Retained Earnings 74,000 10,000 49,000 113,000
Treasury Stock (5,000 ) 3,000 (8,000 )
Total Liabilities and Stockholder's Equity $128,000 138,000 138,000 $185,000

Panel B—Statement of Cash Flows:
Cash Flows from Operating Activities:
Net Income 49,000
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation Expense—Plant Assets 12,000
Gain on Disposal of Plant Assets 4,000
Increase/Decrease in Accounts Receivable 4,000
Increase/Decrease in Merchandise Inventory 28,000
Increase/Decrease in Accounts Payable 2,000
Increase/Decrease in Accrued Liabilities 1,000
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Cash Payment for Acquisition of Plant Assets 52,000
Cash Receipt from Disposal of Plant Assets 14,000
Net Cash Used for Investing Activities
Cash Flows from Financing Activities:
Cash Receipt from Issuance of Notes Payable 34,000
Cash Payment of Notes Payable 40,000
Cash Receipt from Issuance of Common Stock 28,000
Cash Payment for Purchase of Treasury Stock 3,000
Cash Payment of Dividends 10,000
Net Cash Provided by Financing Activities

Net Increase (Decrease) in Cash 3,000
Total 142,000 142,000