(Answered): artial comparative balance sheets and the income statement for 20X2….

Swasey Company provided the following partial comparative balance sheets and the income statement for 20X2.

Swasey Company
Comparative Balance Sheets
At December 31, 20X1 and 20X2
1 20X1 20X2
2 Current assets:
3 Cash $227,000.00 $657,500.00
4 Accounts receivable $753,000.00 $581,500.00
5 Inventories 298,000.00 325,000.00
6 Long-term assets:
7 Plant and equipment 2,196,000.00 2,160,000.00
8 Accumulated depreciation (1,190,000.00) (1,260,000.00)
9 Land 1,005,000.00 1,435,500.00
10 Total assets $3,289,000.00 $3,899,500.00
11 Current liabilities:
12 Wages payable $702,000.00 $517,000.00
13 Long-term liabilities:
14 Bonds payable 0.00 390,000.00
15 Mortgage payable 98,500.00 0.00
16 Total liabilities $800,500.00 $907,000.00
17 Stockholders’ equity:
18 Common stock 375,500.00 375,500.00
19 Paid-in capital in excess of par 284,000.00 284,000.00
20 Retained earnings 1,829,000.00 2,333,000.00
21 Total stockholders’ equity 2,488,500.00 2,992,500.00
22 Total liabilities and stockholders’ equity $3,289,000.00 $3,899,500.00
Swasey Company
Income Statement
For the Year Ended December 31, 20X2
1 Revenues $2,995,000.00
2 Gain on sale of equipment 99,000.00
3 Cost of goods sold (1,924,000.00)
4 Depreciation expense (268,000.00)
5 Interest expense (9,500.00)
6 Net income $892,500.00

During the year, Swasey Company sold equipment with a book value of $275,500 for $374,500 (original purchase cost of $473,500). New equipment was purchased.

Required:
1. Prepare a statement of cash flows for Swasey for 20X2. (Note: Use a minus sign to indicate any decreases in cash or cash outflows. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

Swasey Company
Statement of Cash Flows
For the Year Ended December 31, 20X2
1 Cash flows from operating activities:
2
3 Add (deduct) adjusting items:
4
5
6
7
8
9
10 Cash flows from investing activities:
11
12
13
14
15 Cash flows from financing activities:
16
17
18
19
20

Refer to the list below for the exact wording of a label or an amount description within your Statement of Cash Flows.

Amount Descriptions
Add cost of goods sold
Add interest expense
Decrease in accounts receivable
Decrease in wages payable
Decrease in inventories
Depreciation expense
Gain on sale of equipment
Increase in accounts receivable
Increase in wages payable
Increase in inventories
Issuance of bonds payable
Loss on sale of equipment
Net cash from financing activities
Net cash from investing activities
Net cash from operating activities
Net decrease in cash
Net income
Net increase in cash
Net loss
Payment of dividends
Payment of mortgage
Purchase of equipment
Purchase of land
Receipt of dividends
Sale of equipment

Expert Answer

 

STATEMENT OF CASH FLOWS
Cash flow from operating activities:
Net income 892500
Adjustments to reconcile net income with cash from operating activities:
Depreciation expense 268000
Gain on sale of equipment -99000
Decrease in accounts receivable (753000-581500) 171500
Increase in inventories (325000-298000) -27000
Decrease in wages payables (702000-517000) -185000 128500
Net cash from operating activities 1021000
Cash flows from investing activities:
Sale of equipment 374500
Purchase of equipment (2160000-2196000+473500) -437500
Purchase of land (1435500-1005000) -430500
Net cash used by investing activities -493500
Cash flows from financing activities:
Dividends paid (1829000+892500-2333000)= -388500
Sale of bonds 390000
Redemption of mortgage -98500
Net cash used by financing activities -97000
Increase in cash and cash equivalents 430500
Beginning balance of cash and cash equivalents 227000
Ending balance of cash and cash equivalents 657500
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