Write a statement of cash flows using the indirect method

Reference no: EM131977372

Problem

SPENCER CORPORATION Statement of Financial Position
	December 31
Assets	2017		2016
Cash	$65,000		$29,000
Accounts receivable	87,000		59,000
Inventory	133,000		81,000
Investments in shares (fair value through OCI)	63,000		84,000
Land	65,000		103,000
Equipment	390,000		430,000
Accumulated depreciation-equipment	(117,000	)	(86,000	)
Goodwill	124,000		173,000
Total	$810,000		$873,000
Liabilities and Shareholders' Equity
Accounts payable	$12,000		$51,000
Dividends payable	15,000		32,000
Notes payable	220,000		335,000
Common shares	265,000		125,000
Retained earnings	288,000		284,000
Accumulated other comprehensive income	10,000		46,000
Total	$810,000		$873,000

Additional information:

1. Net income for the fiscal year ending December 31, 2017, was $19,000.

2. In March 2017, a plot of land was purchased for future construction of a plant site. In November 2017, a different plot of land with original cost of $86,000 was sold for proceeds of $95,000.

3. In April 2017, notes payable amounting to $140,000 were retired through issuance of common shares. In December 2017, notes payable amounting to $25,000 were issued for cash.

4. Fair value-OCI investments were purchased in July 2017 for a cost of $15,000. By December 31, 2017, the fair value of Spencer's portfolio of fair value-OCI investments decreased to $63,000. No fair value-OCI investments were sold in the year.

5. On December 31, 2017, equipment with an original cost of $40,000 and accumulated depreciation to date of $12,000 was sold for proceeds of $21,000. No equipment was purchased in the year.

6. Dividends on common shares of $32,000 and $15,000 were declared in December 2016 and December 2017, respectively. The 2016 dividend was paid in January 2017 and the 2017 dividend was paid in January 2018. Dividends paid are treated as financing activities.

Goodwill impairment loss was recorded in the year to reflect a decrease in the recoverable amount of goodwill. No goodwill was purchased or sold in the year.

1. Prepare a statement of cash flows using the indirect method for cash flows for operating activities

2. From the perspective of a shareholder, comment in general on the results reported in the statement of cash flows.

Reference no: EM131977372

Questions Cloud

What is gaggle cost of capital : Gaggle Internet, Inc. is evaluating its cost of capital under alternative financing arrangements. In consultation with investment bankers.

Compute speedys return on assets : Speedy has net income of $28,955, and assets at the beginning of the year of $210,000. Compute its return on assets.

Derive an analogous formula for a relativistic particle : a) Show that for a nonrelativistic particle, a small change in speed leads to a change in de Broglie wavelength given by

What was the most recent different pair share paid on stock : G Corporation stock currently sells for $65.08 per-share. The market requires a return of 10% on the firm stock. If the company maintains a constant 4.5% growth

Write a statement of cash flows using the indirect method : Write a statement of cash flows using the indirect method for cash flows for operating activities

Find what is the break even ebit : Galaxy products is comparing two different capital structures, an all-equity plan (plan 1) and a leveraged plan (plan 2). Under plan 1.

Prepare a cash budget for the quarter ended : Prepare a cash budget for the quarter ended Oct - Dec 2018 (for the months and total for the quarter) Explain the purpose and at least one limitation

Sequence of processes by which a main sequence star : What is the very first step in the sequence of processes by which a main sequence star like our Sun derives its energy output

Creative or innovative strategies for addressing the need : A request for proposal, or RFP, is a document that describes a project's needs and asks for proposed solutions from qualified vendors (Peters, 2011).

User Account

All Pages