Question

Presented below is a condensed version of the comparative balance sheets for Bridgeport Corporation for the last two years at December 31.20172016Cash$ 230,100$ 101,400Accounts receivable234,000240,500Investments67,60096,200Equipment387,400312,000Accumulated Depreciation-Equipment(137,800)(115,700)Current liabilities174,200196,300Common stock208,000208,000Retained earnings399,100230,100Additional information:Investments were sold at a loss of $13,000; no equipment was sold; cash dividends paid were $39,000; and net income was $208,000.Required: Prepare a statement of cash flows for the year ended December 31, 2017.

Answer 1

Cash flow generated 128,700

beginning cash flow 101,400

ending cash flow 230,100

Step-by-step explanation:

Net income 208,000

loss at disposal 13,000

depreciation 22,100

adjusted net income 243,100

change in working capital:

A/R decrease 6,500

current liabilities decrease (22,100)

net (15,600)

from operating activities: 227,500

Investing activities

sale of investment: 15,600

purchase of equipment (75,400)

cash used in investing (59,800)

Financing activities:

dividends paid (39,000)

Cash flow generated 128,700

beginning cash flow 101,400

ending cash flow 230,100

From the net income, we adjust for the non monetary concepts. In this case:

depreciation and the loss on disposal.

Then, we adjust for the change in working capital. Giving us the cash generated from operations.

Then, we solve for the investing activities which are:

purchase of equipment 387,400 ending balance - 312,000 beginning balance

the proceeds from the sale of investment

(96,200 - 67,600) --> book value of what we sold

13,000 loss

proceeds of 15,600

Last, dividends paid into financing activities.

Then we add up everything and get the cash flow for the entire year.