E5-16 solution - EXERCISE516(2025minutes(a...

EXERCISE 5-16 (20–25 minutes)
(a) Shabbona Corporation
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income ................................................................ $125,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense .......................................... $27,000
Increase in accounts receivable .......................... (16,000)
Decrease in inventory .......................................... 9,000
Decrease in accounts payable ............................ (13,000 ) 7,000
Net cash provided by operating activities .................. 132,000
Cash flows from investing activities
Sale of land ............................................................... 39,000
Purchase of equipment ............................................. (60,000 )
Net cash used by investing activities ......................... (21,000)
Cash flows from financing activities
Payment of cash dividends ....................................... (60,000 )
Net increase in cash ........................................................ 51,000
Cash at beginning of year