During the year ended December 31, 2017, Wheaton Co. Ltd. Reported $20,000 of net income, consisting of $95,000 of revenues, $70,000 of operating expenses, and $5,000 of income taxes expense. Following is a list of transactions that occurred during the year:
|
a. |
Depreciation expense, $3,000 (included with operating expenses) |
|
b. |
Increase in wages payable, $500 |
|
c. |
Increase in accounts receivable, $900 |
|
d. |
Decrease in merchandize inventory, $1,200 |
|
e. |
Amortization of patent, $100 |
|
f. |
Non-current borrowings paid in cash, $5,000 |
|
g. |
Issuance of common shares for cash, $12,500 |
|
h. |
Equipment, cost $10,000, acquired by issuing common shares |
|
i. |
At the end of the fiscal year, a $5,000 cash dividend was declared, payable one month later |
|
j. |
Old machinery sold for $6,000 cash; it originally cost $15,000 (one-half depreciated). Loss reported on income statement as ordinary item and included in the $70,000 of operating expenses. |
|
k. |
Decrease in accounts payable, $1,000. |
|
l. |
Cash at January 1, 2017 was $1,000; change in cash during the year, $37,900 |
|
m. |
There was no change in income taxes owing. |
Required:
- Prepare a cash flow table. The first two columns are not necessary. Enter amounts above in the “Change” columns. (Hint: the change to cash is the balancing figure in the “Change” columns – $37,900.)
- Prepare a statement of cash flows.
- Explain what this statement tells you about Wheaton Co. Ltd.
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