Prepare a worksheet for a statement of cash flows. Enter the reconciling items directly in the work…

This exercise will prepare you to use a worksheet in helping you prepare the data for the statement of cash flows.

Jennifer & Dana Designs Inc.
Comparative Balance Sheets
December 31
(All numbers in millions)

Assets

2014

2013

Cash

$98,700

$47,250

Accounts Receivable

87.800

56.000

Inventories

121,900

103,650

Investments

81,500

87,000

Plant Assets

250,000

205,000

Accumulated Depreciation

(49500.)

(49500.)

Total

$590400

$458900

Liabilities and Stockholders” Equity

Accounts Payable

$57,700

$48,280

Accrued Expenses Payable

121,000

18,830

bonds Payable

100,000

80,000

Common Stock

250.000

200.000

Retained Earnings

170.600

111.790

Total

$590400

$458900

Jennifer & Dana Designs Inc.
Income Statement
For the Year Ended December 31, 2014

Sales

5312.500

Gain on sale of plant assets

8,750

321,250

Less:

Cost of goods sold

599,460

Operating expenses (excluding depreciation expense)

14,670

Depreciation expense

49, 700

Income taxes

7,270

Interest expense

2,940

174.040

Net income

$147210

Additional information: New plant assets costing $92,000 were purchased for cash during the year. Investments were sold at cost. Plant assets costing $47,000 were sold for $15,550 and resulted in a gain of $8,750. A cash dividend of $88,400 was declared and paid during the year.

Instructions

Prepare a worksheet for a statement of cash flows. Enter the reconciling items directly in the work sheet columns, identifying the debit and credit amounts alphabetically.

Analysis: a. Increase in receivables reduces cash inflow-credit. b. Increase in inventories increases cash outflow-credit. c. Increase in accounts payable reduces cash outflow-debit. d. Decrease in accrued expenses payable increases cash outflow-credit. e. Sale of investments increases cash inflow-debit. f. Purchase of plant assets increases cash outflow-credit g. Depreciation expense is a noncash charge to income-debit. h. Sale of plant assets increases cash inflow-debit. i. Issue of bonds increases cash inflow-debit. j. Issue of common stock increases cash inflow-debit. k. Net income increases cash inflow-debit. l. Payment of dividends increases cash outflow-credit. r. Increase in cash balance.

 

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