Prepare a Statement of Cash Flows in Good Form 1. Prepare a statement of cash flows in good form.
- Determine the quarterly dividend per share amount that G paid during 2017.
- Assume (1) that the quarterly dividend per share amount did not change during the year and (2) that the ex-dividend dates were 03-15, 06-15, 09-15, and 12-15. Be sure to show in detail how you determined the quarterly dividend per share amount.
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G Service Company’s 2016 and 2017 balance sheets and 2017 income statement (excluding EPS) follow:
12-31-1612-31-17
Cash$900,000$1,820,000
Trade receivables, net600,000760,000
Prepaid expenses100,000250,000
Plant assets2,900,0003,500,000
Accumulated depreciation(600,000)(725,000)
Patents240,000200,000
$4,140,000$5,805,000
Accrued liabilities109,95372,000
Unearned revenues250,00065,000
Short-term debt150,000100,000
Bonds payable300,000200,000
Prepare a Statement of Cash Flows in Good Form
Discount on bonds payable (2,503) (6,173)
Asset retirement obligations82,270154,513
Common stock ($1 par value)50,00053,350
Additional paid-in-capital, common stock1,450,0001,623,400
Treasury stock(250,000)(150,000)
Retained earnings2,000,2803,692,910
$4,140,000$5,805,000
Sales$6,700,000
Cost of services provided 2,900,000
Operating expenses1,400,000
Other (gains)/losses, net(3,458)
Impairment loss on plant assets47,000
Interest expense18,958
Income before taxes2,337,500
Income tax expense514,250
Net income$1,823,250
Additional information for G follows:
During 2017, G declared and paid cash dividends.
On 06-30-17, G declared and distributed a 5% stock dividend on its outstanding common stock. At the time of declaration, one share of G’s stock traded for $48.
On 08-15-17, G issued, in exchange for cash, 600 shares of its common stock when G’s stock traded for $50 per share. At the time of the issuance, G incurred and paid $1,200 of stock issuance costs.
G is a publicly-traded company. On 12-01-17, G issued 500 shares of its common stock in exchange for a tract of land (PP&E). At the time of the issuance, the appraised value of the land was $40,000.
On 09-01-16, bought back 5,000 shares of its own common stock. This was G’s first treasury stock transaction. Also, during 2016, this was G’s only treasury stock transaction. On 12-31-17, G reissued 2,000 of its treasury shares at $48 per share.
During 2017, G sold a machine (PP&E) for $16,000. The machine had an original cost of $50,000. At the time of sale, the machine’s book value was $5,000.
During 2017, G spent $150,000 to increase the useful life of one of its fixed assets.
On 12-31-15, G acquired a fixed asset that will require G to spend an estimated $100,000 to dismantle the asset when G retires the asset on 12-31-20. At 12-31-15, the interest rate on US Treasury securities was 2% and G’s credit standing required a 3% risk premium.
On 01-01-17, G acquired a fixed asset that will require G to spend an estimated $80,000 to dismantle the asset when G retires the asset on 12-31-20. At 01-01-17, the interest rate on US Treasury securities was 1.5% and G’s credit standing required a 4% risk premium.
G has several patents, all of which have limited lives. During 2017, G did not enter into any transaction that would increase the balance in its patent account.
Prepare a Statement of Cash Flows in Good Form
On 06-30-14, G issued $300,000 of its 5%, 5-year callable term bonds dated 06-30-14. The bonds pay interest every June 30 and December 31. When G issued the bonds, similar bonds paid 4.75%. On 06-30-14, G incurred and paid $8,000 of bond issuance costs. On 12-31-17, after making the semi-annual interest payment, G called in (retired) all the bonds at 102.
On 12-31-17, G issued $200,000 of its 2%, 5-year term bonds dated 12-31-17. The bonds pay interest every December 31 and June 30. When G issued the bonds, similar bonds paid 2.5%. On 12-31-17, G incurred and paid $1,500 of bond issuance costs.
G’s 2017 operating expenses include depreciation, patent amortization, and ARO accretion expenses.
G uses the indirect method.
Prepare a statement of cash flows in good form. Be sure to label your answers as provided by OR used in. Do NOT worry about any supplemental disclosures
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