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Problem 13-14A Prepare a statement of cash flows (indirect Method) (Lo2. Lo3) Comparative financial statements for Shores Inc. Follows:

Shores Inc
Comparative Balance Sheet
December 31, year 2 and year one.

Year2 Year 1
Assets
Cash $8 $18
Accounts Receivable 355 233
inventory 120 168
Prepaid expenses 12 5
plant and eqip 612 475
less accumulated depreciation -97 -88
long term investments 17 22
total assets $1,027 833

Liabilities and Stockholders' Equity
Accounts payable $321 $225
Accrued liabilities 62 74
Bonds payable 288 174
deferd income taxes 45 36
Common stock 205 254
retained earnings 106 70
Total liabilities and stock holders equity $1,027 833

Shores Inc.
Income statemant
For the year ended December 31, year 2

Sales $805
Cost of goods sold 502
Gross margin 303
Selling and admin expenses 215
Net operating income 88
nonoperating items:
Gain on sale of investment $7
Loss on sale of equipment -4 3
Income before taxes 91
Income taxes 24
Net income $67

During year 2, the company sold some equipment for $10 that had cost $20 and on which there was accumulated depreciation of $6. In addition, the company sold long term investments for $12 that had cost $5 when purchased several years ago. Cash dividends totaling $31 were paid during year 2.

Required
1.       Using the indirect method, determine the net cash provided by operating activities for year 2.
2.       Using the information in (1) above, along with analysis of the remaining balance sheet accounts, prepare a statement of cash flows for year 2.

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Problem 13-14A Prepare a statement of cash flows (indirect method) (Lo2. Lo3)
Comparative financial statements for Shores Inc. follows:

Shores Inc.
Comparative Balance Sheets
December 31, year 2 and year one.
Increase Activity
Year 2 Year 1 (Decrease)
Assets
Cash $  8  $   18 -10
Accounts receivable 355 233 122 Operating
Inventory 120 168 -48 Operating
Prepaid expenses 12 5 7 Operating
Plant and equipment 612 475 137 Investing
Accum. Depreciation-Equipment  (97)  (88) 9 Operating
Long term investments 17 22 -5 Investing
Total assets 1,027 833 

Liabilities and Equity
Accounts payable $  321 $ 225 96 Operating
Accrued liabilities 62 74 -12 Operating
Bonds payable 288 174 114 Financing
Deferred income taxes 45 36 9 Operating
Common stock 205 254 -49 Financing
Retained earnings 106 70
Total liabilities and equity 1,027 833

Shores Inc.
Income Statement
For the year ended December 31, year 2

Sales $805
Less cost of goods sold 502
Gross margin 303
Selling and admin expenses 215
Net operating income 88
Nonoperating items:
Add: Gain on sale of investment 7
Less: Loss on sale of equipment 4
Income before ...

Solution Summary

This solution is comprised of a detailed explanation to prepare a statement of cash flows (indirect Method).

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Coastal Shores Inc estimated inventory loss due to Hurricane Fred

1) Coastal Shores Inc. (CSI) was completely destroyed by Hurricane Fred on August 5, 2011. At January 1, CSI reported an inventory of $170,000. Sales from January 1, 2011, to August 5, 2011, totaled $480,000 and purchases totaled $195,000 during that time. CSI consistently marks up its products 60% over cost to arrive at a selling price. The estimated inventory loss due to Hurricane Fred would be:

$131,175.
$65,000.
$17,143.
None of the above is correct.

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