80.2K

Verified Solution

Link Copied!

Exercise 23-13

Cheyenne Inc., a greeting card company, had the following statements prepared as of December 31, 2017.

CHEYENNE INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 12/31/17 12/31/16 Cash $6,000 $7,100 Accounts receivable 62,600 51,100 Short-term debt investments (available-for-sale) 35,400 18,100 Inventory 39,700 59,600 Prepaid rent 5,000 4,000 Equipment 154,200 128,700 Accumulated depreciationequipment (35,300 ) (24,800 ) Copyrights 45,500 49,800 Total assets $313,100 $293,600 Accounts payable $45,500 $39,800 Income taxes payable 4,000 6,000 Salaries and wages payable 7,900 3,900 Short-term loans payable 8,000 9,900 Long-term loans payable 60,600 69,500 Common stock, $10 par 100,000 100,000 Contributed capital, common stock 30,000 30,000 Retained earnings 57,100 34,500 Total liabilities & stockholders equity $313,100 $293,600

CHEYENNE INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017 Sales revenue $340,975 Cost of goods sold 176,300 Gross profit 164,675 Operating expenses 119,600 Operating income 45,075 Interest expense $11,300 Gain on sale of equipment 2,100 9,200 Income before tax 35,875 Income tax expense 7,175 Net income $28,700

Additional information:

1. Dividends in the amount of $6,100 were declared and paid during 2017. 2. Depreciation expense and amortization expense are included in operating expenses. 3. No unrealized gains or losses have occurred on the investments during the year. 4. Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2017.

Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer & Explanation Solved by verified expert

See Answer