Question
Statement of cash flows—indirect method
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The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is shown as follows:
Dec. 31, 2016 Dec. 31, 2015
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Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 625,760 $ 585,920
Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227,840 208,960
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641,760 617,120
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 240,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328,000 0
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705,120 553,120
Accumulated depreciation—equipment . . . . . . . . . . . . . . . . . . . . . . . . . . (166,400) (148,000) Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,362,080 $2,057,120
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Liabilities and Stockholders’ Equity
Accounts payable (merchandise creditors) . . . . . . . . . . . . . . . . . . . . . . . .
$ 424,480
$ 404,960
Accrued expenses payable (operating expenses) . . . . . . . . . . . . . . . . . .
42,240
52,640
Dividends payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,000
19,200
Common stock, $4 par . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
150,000
100,000
Paid-in capital: Excess of issue price over par—common stock . . . . . .
417,500
280,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,303,860
1,200,320
Total liabilities and stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . .
$2,362,080
$2,057,120
Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows:
a. The investments were sold for $280,000 cash.
b. Equipment and land were acquired for cash.
c. There were no disposals of equipment during the year.
d. The common stock was issued for cash.
e. There was a $199,540 credit to Retained Earnings for net income.
f. There was a $96,000 debit to Retained Earnings for cash dividends declared.
Instructions
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
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