50.1K

Verified Solution

Link Copied!

January 1, 2018 Balance Sheet
Assets			Liabilities and Equity
Cash	$400,000.00		Accounts Payable	$105,000.00
Accounts Receivable	$175,000.00		Rent Payable	$175,000.00
Inventory	$200,000.00		Salaries Payable	$110,000.00
Supplies	$50,000.00		Loan Payable	$500,000.00
Prepaid Insurance	$130,000.00		Total Liabilities	$890,000.00
Fixed Assets	$2,000,000.00
Accum. Depr.	-$1,400,000.00		Common Stock($0 par)	$360,000.00
			Retained Earnings	$305,000.00
			Total Equity	$665,000.00
Total Assets	$1,555,000.00		Total Liab and Equity	$1,555,000.00
Andrews Inc. manufacture and sells paper products. Provided below is a list of transactions that the company encountered throughout the month of January 2018. The beginning balance sheet for the year has also been provided for you.
1) January 1, 2018	Purchased a new Xerox machine for $125,000(paid cash). The machine has a life of 4 years, with an expected residual value of $25,000.
2) January 5	Sold 30,000 bundles of paper at $20 a bundle. Half of payment received in cash, the other half for credit. Each bundle cost the company $5 to make
3) January 10	Consumed $20,000 in exsisting supplies. Purchased $30,000 in new supplies with cash
4) January 15	Received $75,000 for paper sold in 2017
5) January 15	Sold the old Xerox machine that had a cost of $300,000 and accumulated depreciation of $100,000 for $125,000
6) January 16	Paid wages which were accrued in 2017 ($110,000)
7) January 17	Paid rent that was accrued in 2017 ($175,000)
8) January 31	The company issued $120,000 in common stock
9) January 31	Dividends of $60,000 were declared and paid
10) January 31	Borrowed $100,000 from National Bank with 10% annual interest rate
11) January 31	Paid cash for prepaid insurance, to be consumber in 2019
12) January 31	The company bought back $100,000 treasury stocck
13) January 31	Made monthly loan principal and interest payment. Loan was initiated on December 31, 2017 and is a one year loan with an annual interest rate of 12%
14) January 31	Wages to be paid in 2019 are $90,000.
15) January 31	Rent to be paid in 2019 is $170,000
16) Additonal Information	Exisiting Fixed Assets have a life of 5 years and were acquired on January 1, 2014
Additonal Information	All fixed assets are depreciated using the straight line method
Additonal Information	Assume no taxes in this problem
17) Additonal Information	The prepaid insurance that was purchased in 2017 expires on December 31, 2018. The policy was for one year. The full amount will be deferred at year end. Please prepare the statement of cash flows using the direct and indirect method.

Answer & Explanation Solved by verified expert

See Answer