Problem: Comparative balance sheets for 2016 and 2017 and an income statement for 2017 are provided below for Frizzle's shop.
Balance Sheet As of December 31st
|
COMPARATIVE BALANCE SHEETS
|
|
ASSETS
|
2017
|
2016
|
Increase
(Decrease)
|
|
Cash
|
1550
|
1100
|
450
|
|
Accounts receivable
|
550
|
1200
|
(650)
|
|
Inventory
|
1800
|
1300
|
500
|
|
Investment - Trading Securities
|
970
|
970
|
0
|
|
Fair Value Adjustment
|
70
|
0
|
70
|
|
Property Plant & Equipment
|
12000
|
10800
|
1200
|
|
Accumulated depreciation - PPE
|
(4650)
|
(5400)
|
750
|
|
Goodwill
|
400
|
600
|
(200)
|
|
Total assets
|
12690
|
10570
|
2120
|
|
LIABILITIES
|
|
|
|
|
Accounts payable
|
200
|
550
|
(350)
|
|
Accrued Wages
|
800
|
220
|
580
|
|
Convertible Bonds Payable
|
0
|
300
|
(300)
|
|
Bonds Payable
|
3400
|
1800
|
1600
|
|
Discount on bonds payable
|
(10)
|
(12)
|
2
|
|
|
4390
|
2858
|
1532
|
|
STOCKHOLDERS EQUITY
|
|
|
0
|
|
Common stock, $1 par
|
4300
|
3100
|
1200
|
|
Paid-In capital - Common Stock
|
300
|
100
|
200
|
|
Retained earnings
|
3700
|
4512
|
(812)
|
|
Total liabilities and stockholders' equity
|
12690
|
10570
|
3652
|
|
INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
|
|
REVENUES
|
|
|
|
Sales revenue
|
|
25,600
|
|
Dividend Revenue
|
|
110
|
|
Unrealized Holding Gain/Loss - Income
|
|
70
|
|
Total Net Sales
|
|
25,780
|
|
|
|
|
|
EXPENSES
|
|
|
|
Cost of Goods Sold
|
21,300
|
|
|
Operating Expenses
|
4,287
|
|
|
Interest expense
|
45
|
|
|
Loss Due to impairment of Goodwill
|
200
|
|
|
Loss on sale of Machinery
|
70
|
|
|
TOTAL EXPENSE
|
|
25,902
|
|
Income before tax
|
|
(122)
|
|
Income tax expense
|
|
0
|
|
NET INCOME
|
|
(122)
|
Additional Information from the 2017 accounting records:
a. Harry owns a 10% of Larry Inc. which is labeled as a Trading Security that increased in market value during 2017. Larry gave out $1,100 worth of dividends to all of its owners during 2017.
b. Machinery (part of the Plant Property and Equipment value) with an original cost of $1,000 was sold. Deprecation was calculated using the straight-line method and exactly 90% of its useful life was used up.
c. $1,600 worth of equipment was purchased by issuing a bond. All other Property, Plant, and Equipment purchases were made in cash.
d. Depreciation is included as part of Operating Expense.
e. 100% of Convertible bonds were exchanged for 100 shares of $1 par common stock.
Required: Prepare the statement of cash flow under the indirect method. Your finished product should have all the information disclosed on a formal statement, including a list of noncash transactions.