Problem 23-4
Crane Company had the following information available at the endof 2017.
CRANECOMPANY
COMPARATIVE BALANCE SHEETS
AS OF DECEMBER 31, 2017 AND 2016 |
| | 2017 | | 2016 |
| Cash | | $9,930 | | | $4,010 | |
| Accounts receivable | | 20,450 | | | 12,910 | |
| Short-term investments | | 22,070 | | | 30,030 | |
| Inventory | | 42,300 | | | 35,310 | |
| Prepaid rent | | 3,020 | | | 12,090 | |
| Prepaid insurance | | 2,090 | | | 90 | |
| Supplies | | 1,010 | | | 75 | |
| Land | | 124,270 | | | 175,470 | |
| Buildings | | 353,500 | | | 353,500 | |
| Accumulated depreciation—buildings | | (105,150 | ) | | (87,890 | ) |
| Equipment | | 526,140 | | | 396,090 | |
| Accumulated depreciation—equipment | | (129,450 | ) | | (111,310 | ) |
| Patents | | 45,390 | | | 49,550 | |
| Total assets | | $915,570 | | | $869,925 | |
| | | | | | |
| Accounts payable | | $21,800 | | | $32,080 | |
| Income taxes payable | | 5,020 | | | 3,970 | |
| Salaries and wages payable | | 4,950 | | | 3,000 | |
| Short-term notes payable | | 10,060 | | | 10,060 | |
| Long-term notes payable | | 60,060 | | | 69,370 | |
| Bonds payable | | 397,380 | | | 397,380 | |
| Premium on bonds payable | | 30,200 | | | 32,145 | |
| Common stock | | 239,140 | | | 221,530 | |
| Paid-in capital in excess of par—common stock | | 24,850 | | | 17,400 | |
| Retained earnings | | 122,110 | | | 82,990 | |
| Total liabilities and stockholders’equity | | $915,570 | | | $869,925 | |
CRANE COMPANY
INCOME STATEMENT AND DIVIDEND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2017 |
| Sales revenue | | | | | $1,157,060 | |
| Cost of goods sold | | | | | 748,200 | |
| | | | | 408,860 | |
| | | | | | |
| Gross margin | | | | | | |
| Operating expenses | | | | | | |
| Selling expenses | | $78,550 | | | | |
| Administrative expenses | | 156,290 | | | | |
| Depreciation/Amortization expense | | 39,560 | | | | |
| Total operating expenses | | | | | 274,400 | |
| Income from operations | | | | | 134,460 | |
| Other revenues/expenses | | | | | | |
| Gain on sale of land | | 7,950 | | | | |
| Gain on sale of short-term investment | | 3,980 | | | | |
| Dividend revenue | | 2,380 | | | | |
| Interest expense | | (51,810 | ) | | (37,500 | ) |
| Income before taxes | | | | | 96,960 | |
| Income tax expense | | | | | 39,460 | |
| Net income | | | | | 57,500 | |
| Dividends to common stockholders | | | | | (18,380 | ) |
| To retained earnings | | | | | $39,120 | |
Prepare a statement of cash flows for Crane Company using thedirect method accompanied by a reconciliationschedule. Assume the short-term investments are debt securities,classified as available-for-sale. (Show amounts in theinvesting and financing sections that decrease cash flow witheither a - sign e.g. -15,000 or in parenthesis e.g.(15,000).)
