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Comparative balance sheets for 2013 and 2012 and a statement of income for 2013 are given below for Me grobolize Industries
Comparative balance sheets for 2013 and 2012 and a statement of income for 2013 are given below for Me grobolize Industries. Additonal information from the accounting records of Metagrobolize also is provided METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2013 and 2012 ($ in 000s) 2013 2012 Assets Cash $ 600 $ 375 Accounts receivable 600 450 Inventory 900 525 Land 675 600 Building 900 900 Less: Accumulated depreciation (300) (270) Equipment 2,850 2,250 Less: Accumulated depreciation (525) (480) Patent 1,200 1,500 $6,900 $5,850 Liabilities Accounts payable $ 750 $ 450 Accrued expenses payable 300 225 Lease liability--land 150 0 Shareholders' Equity Common stock 3,150 3,000 Paid-in capital-excess of par 750 675 Retained earnings 1,800 1,500 $6,900 $5,850
$2,735 METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2013 ($ in 000) Revenues Sales revenue $2,645 Gain on sale of land 90 Expenses Cost of goods sold $ 600 Depreciation expense--building 30 Depreciation expense--equipment 315 Loss on sale of equipment 15 Amortization of patent 300 Operating expenses Net Income 500 1,760 $ 975 Additional information from the accounting records: a. During 2013. equipment with a cost of $300,000 (90% depreciated) was sold . Any equipment purchased used cash. b. The statement of shareholders' equity reveals reductions of $225,000 and $450,000 for stock dividends and cash dividends, respectively. Required: #3 Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2013. Present cash flows from operating activities by the direct method. (You may omit the schedule to reconcile net income to cash flows from operating activities.) #if Prepare the scf using the indirect memud.
Expert Solution
| Workings for direct method | $' 000 |
| Cash Received from customers | |
| Opening Accounts Receivable | 450.00 |
| Add: Sales | 2,645.00 |
| Less: Closing Accounts Receivable | 600.00 |
| Cash Received from customers | 2,495.00 |
| Inventory purchased | |
| Cost of goods sold | 600.00 |
| Add: Closing Inventory | 900.00 |
| Less: Opening Inventory | 525.00 |
| Inventory purchased | 975.00 |
| Cash paid to suppliers | |
| Opening Accounts Payable | 450.00 |
| Add: Purchases | 975.00 |
| Less: Closing Accounts Payable | 750.00 |
| Cash paid to suppliers | 675.00 |
| Operating Expense paid | |
| Operating Expense | 500.00 |
| Add: Opening Accrued Liabilities | 225.00 |
| Less: Closing Accrued Liabilities | 300.00 |
| Operating Expense paid | 425.00 |
| Equipment sold | |
| Cost of Equipment sold | 300.00 |
| Less: Accumulated depreciation | 270.00 |
| Less: Loss on sale | 15.00 |
| Equipment sold | 15.00 |
| Land sold | |
| Opening Balance | 600.00 |
| Add: Lease liability | 150.00 |
| Less: Closing Balance | 675.00 |
| Cost of land sold | 75.00 |
| Add: Gain on sale | 90.00 |
| Sale value of land | 165.00 |
| Equipment purchased | |
| Closing Balance | 2,850.00 |
| Add: Cost of Equipment sold | 300.00 |
| Less: Opening Balance | 2,250.00 |
| Equipment purchased | 900.00 |
| Metagrobolize | ||
| Cashflow statement | $' 000 | $' 000 |
| Particulars | ||
| Cash flow from operating activities | ||
| Cash Received from customers | 2,495.00 | |
| Less: Cash Payments | ||
| To Suppliers | 675.00 | |
| Operating Expenses | 425.00 | 1,100.00 |
| Net cash provided by operating activities | 1,395.00 | |
| Cash flow from investing activities | ||
| Equipment sold | 15.00 | |
| Land sold | 165.00 | |
| Equipment purchased | (900.00) | |
| Net cash used for investing activities | (720.00) | |
| Cash flow from financing activities | ||
| Dividends paid | (450.00) | |
| Net cash used for financing activities | (450.00) | |
| Net Increase/(Decrease) in cash | 225.00 | |
| Cash Balance, beginning | 375.00 | |
| Cash Balance, ending | 600.00 |
| Non cash financing and investing activity | $' 000 |
| Lease liability- land | 150.00 |
| Stock dividends | 225.00 |
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