Question

3.

Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.

METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s)
		2018			2017
Assets
Cash	$	470			$	220
Accounts receivable		530				280
Inventory		680				395
Land		700				620
Building		800				800
Less: Accumulated depreciation		(200	)			(170)
Equipment		2,950				2,690
Less: Accumulated depreciation		(334	)			(300	)
Patent		1,900				2,000
	$	7,496			$	6,535
Liabilities
Accounts payable	$	780			$	630
Accrued expenses payable		240				215
Lease liability—land		130				0
Shareholders' Equity
Common stock		2,640				2,500
Paid-in capital—excess of par		600				545
Retained earnings		3,106				2,645
	$	7,496			$	6,535

METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2018 ($ in 000s)
Revenues
Sales revenue	$	3,123
Gain on sale of land		75		$	3,198
Expenses
Cost of goods sold	$	980
Depreciation expense—building		30
Depreciation expense—equipment		412
Loss on sale of equipment		20
Amortization of patent		100
Operating expenses		600			2,142
Net income				$	1,056

Additional information from the accounting records:

1. Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2018.
2. During 2018, equipment with a cost of $420,000 (90% depreciated) was sold.
3. The statement of shareholders' equity reveals reductions of $195,000 and $400,000 for stock dividends and cash dividends, respectively.

Required:
Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)

METAGROBOLIZE INDUSTRIES Statement of Cash Flows For year ended December 31, 2018 ($ in 000s) Cash inflows. Cash inflows: Cash outflows:

Answer 1

METAGROBOLIZE INDUSTRIES
Statement of Cash flows (in 000s)
For the Year Ended December 31, 2018
Cash flows from operating activities
Cash inflows:
Cash received from customers	$   2,873		3123+280-530
Cash outflows:
Cash paid to suppliers	$ (1,115)		980+630-780+680-395
Cash paid for operating expenses	$     (575)		600+215-240
Net cash provided by operating activities		$ 1,183
Cash flows from investing activities
Cash received from sale of equipment	$         22		420*10%-20
Cash paid for purchase of equipment	$     (680)		2690-2950-420
Cash received from sale of land	$       145		620+150-700+75
Net cash used by investing activities		$   (513)
Cash flows from financing activities
Cash paid for lease liability	$       (20)
Cash paid for dividends	$     (400)
Net cash provided by financing activities		$   (420)
Net Increase in cash and cash equivalents		$     250
Cash and cash equivalents at beginning of period		$     220
Cash and cash equivalents at end of period		$     470
Non cash investing and financing activities
Issue of stock dividend		$     195
Land acquired by lease		$     150

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