Question

Question: (Worksheet Preparation) Below is the comparative balance sheet for Stevie Wonder Corporation.

Particulars	Dec 31, 2017	Dec 31, 2016
Cash	\(16,500	\)21,000
Short-term investments	25,000	19,000
Accounts receivables	43,000	45,000
Allowance for doubtful accounts	(1,800)	(2,000)
Prepaid expenses	4,200	2,500
Inventory	81,500	65,000
Land	50,000	50,000
Buildings	125,000	73,500
Accumulated depreciation – Buildings	(30,000)	(23,000)
Equipment	53,000	46,000
Accumulated depreciation – equipment	(19,000)	(15,500)
Delivery equipment	39,000	39,000
Accumulated depreciation – delivery equipment	(22,000)	(20,500)
Patents	15,000	0
	\(379,400	\)300,000
Accounts payable	\(26,000	\)16,000
Short-term note payable	4,000	6,000
Accrued payable	3,000	4,600
Mortgage payable	73,000	53,400
Bond payable	50,000	62,500
Common stock	140,000	102,000
Paid-in-capital in excess of par	10,000	4,000
Retained earnings	73,400	51,500
	\(379,400	\)300,000

Dividends in the amount of $15,000 were declared and paid in 2017.

Instructions

From this information, prepare a worksheet for a statement of cash flows. Make reasonable assumptions as appropriate. The short-term investments are considered available-for-sale and no unrealized gains or losses have occurred on these securities

Short answer

Answer

Net changes in the cash totals($4,500).

Step-by-step solution

Definition of Bond payable

Bonds payable can be defined as the liability reported by the business entity for securities issued to the investors. The investors

Worksheet for statement of cash flow

Step 2: Worksheet for statement of cash flow

Particulars	Dec 31, 2016	Reconciling items		Dec 31, 2017
		Debit	Credit
Cash	$21,000		$4,500	$16,500
Short-term investments	19,000	6,000		25,000
Accounts receivables	45,000		2,000	43,000
Prepaid expenses	2,500	1,700		4,200
Inventory	65,000	16,500		81,500
Land	50,000			50,000
Buildings	73,500	51,500		125,000
Equipment	46,000	7,000		53,000
Delivery equipment	39,000			39,000
Patents	0	15,000		15,000
Total debit	$			$
Accounts payable	$16,000		10,000	$26,000
Short-term note payable	6,000	2,000		4,000
Accrued payable	4,600	1,600		3,000
Mortgage payable	53,400		19,600	73,000
Bond payable	62,500	12,500		50,000
Common stock	102,000		38,000	140,000
Paid-in-capital in excess of par	4,000		6,000	10,000
Retained earnings	51,500	15,000	36,900	73,400
Allowance for doubtful accounts	2,000	200		1,800
Accumulated depreciation – Buildings	23,000		7,000	30,000
Accumulated depreciation – equipment	15,500		3,500	19,000
Accumulated depreciation – delivery equipment	20,500		1,500	22,000

Cash flow statement

Particular	Amount $	Amount $
Cash flow from operations
Net income $\left(\$73,400-\$51,500+\$15,000\right)$		$36,900
Add/Less: Adjustments to the net income
Depreciation expenses for equipment$\left(\$19,000-\$15,500\right)$	7,000
Depreciation expenses for building $\left(\$22,000-\$20,500\right)$	3,500
Depreciation expenses for delivery equipment	1,500	12,000
Add/Less: Changes in the current assets and current liabilities
Increase in short-term investment	(6,000)
Decrease in accounts receivables (net)	1,800
Increase in prepaid expenses	(1,700)
Increase in inventory	(16,500)
Increase in account payable	10,000
Decrease in short-term note payable	(2,000)
Decrease in accrued payable	(1,600)	(16,000)
Cash flow from operation		$32,900
Cash flow from investing activities
Acquisition of building	(51,500)
Acquisition of equipment	(7,000)
Purchase of patent	(15,000)
Cash flow used investing activities		($73,500)
Cash flow from financing activities
Mortgage payable	19,600
Redemption of bonds	(12,500)
Issue of common stock	38,000
Paid in capital in excess of par	6,000
Dividend payment	(15,000)
Cash flow from financing activities		$36,100
Net change in cash balance		($4,500)
Add: beginning cash balance		21,000
Ending cash balance		$16,500