Question

Problem 12-7A (Part Level Submission) Presented below are the financial statements of Crane Company. Crane Company Comparative Balance Sheets December 31 Assets 2017 2016 Cash $ 42,000 $ 24,000 Accounts receivable 24,000 16,800 Inventory 33,600 24,000 Property, plant, and equipment 72,000 93,600 Accumulated depreciation (38,400 ) (28,800 ) Total $133,200 $129,600 Liabilities and Stockholders’ Equity Accounts payable $ 22,800 $ 18,000 Income taxes payable 8,400 9,600 Bonds payable 20,400 39,600 Common stock 21,600 16,800 Retained earnings 60,000 45,600 Total $133,200 $129,600 Crane Company Income Statement For the Year Ended December 31, 2017 Sales revenue $290,400 Cost of goods sold 210,000 Gross profit 80,400 Selling expenses $21,600 Administrative expenses 7,200 28,800 Income from operations 51,600 Interest expense 3,600 Income before income taxes 48,000 Income tax expense 9,600 Net income $ 38,400 Additional data: 1. Depreciation expense was $21,000. 2. Dividends declared and paid were $24,000. 3. During the year equipment was sold for $10,200 cash. This equipment cost $21,600 originally and had accumulated depreciation of $11,400 at the time of sale. (a) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Crane Company Statement of Cash Flows $ Adjustments to reconcile net income to $ $

Answer 1

Statement of Cash Flows:

Cash Flows from operating activities:
Net Income	38,400
Adjustments to reconcile net income with cash flows
+Depreciation Expense(non-cash)	21,000
-Increase in Accounts Receivables(cash block)	-7,200
-Increase in Inventory	-9,600
+Increase in Accounts payables (cash not paid)	4,800
-Decrease in Income Taxes payables	-1,200
Cash Flows from operating activities(A)	$46,200
Cash Flows from Investing Activities
Sale of Equipment	10,200
Cash Flows from Investing Activities(B)	$10,200
Cash flows from financing activities
Bonds paid	-19,200
Common Stock issued	4,800
Dividends paid	-24,000
Cash flows from financing activities(C)	-38,400
Net Cash Flow during the year (A+B+C)	18,000
Add: Beginning Cash Balance	24,000
Ending Cash Balance	42,000