HW E 5.16.pdf - EXERCISE 5-16(2025 minutes(a Shabbona...

EXERCISE 5-16 (20–25 minutes)
(a) Shabbona Corporation
Statement of Cash Flows
For the Year Ended December 31, 2007
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 ...........................................