50.1K

Verified Solution

Link Copied!

Prepare a cash flow statement using the indirect method. ***Fixtures were purchased for cash and some of the cash from the land sale was use to pay off debt and buy investments.
Trial Balance
December 31, 2016
	Debits	Credits
Cash	$435
Accounts receivable	$200
Allowance for bad debts		$25
Prepaid advertising	$85
Short-term investments	$300
Goodwill	$110
Land	$0
Inventories	$750
Copyrights	$21
Buildings	$1,200
Accumulated depreciation - buildings		$615
Fixtures	$2,300
Accumulated depreciation - fixtures		$915
Accounts payable		$275
Advances from customers		$20
Income tax payable		$85
Interest payable		$14
Short-term notes payable		$0
Salaries payable		$150
Bonds payable -long term		$1,000
Long-term notes payable		$0
Common Stock ($1 par)		$500
Retained Earnings		$1,189
Dividends	$50
Sales		$9,425
Gain on the sale of land		$75
Cost of goods sold	$5,800
Advertising expense	$273
Bad debt expense	$130
Depreciation expense	$327
Income tax expense	$250
Interest expense	$78
Other operating expenses	$650
Salaries expense	$1,250
Supplies expense	$79
	$14,288	$14,288

Income Statement
December 31, 2016
Revenues
Sales	$9,425
Less: Sales returns	-
		$9,425.00
Gain on the sale of land		75.00
Total Revenues		$9,500.00
Expenses
Cost of goods sold	5,800.00
Advertising expense	273.00
Bad debt expense	130.00
Depreciation expense	327.00
Income tax expense	250.00
Interest expense	78.00
Other operating expenses	650.00
Salaries expense	1,250.00
Supplies expense	79.00
Total expenses		8,837.00
Net Income		$663.00

Statement of Retained Earnings
For Month Ended December 31,2016
Retained Earnings		$1,189
Add: Net Income		$663.00
Less: Dividends		$50
Retained earnings December 31, 2016		$1,802.00

Account Name	December 31, 2015	December 31, 2016
Accounts payable	$250	$275
Accounts receivable	$179	$200
Accumulated depreciation - buildings	$513	$615
Accumulated depreciation - fixtures	$690	$915
Advances from customers	$25	$20
Advertising expense	$271	$273
Allowance for bad debts	$25	$25
Bad debt expense	$100	$130
Bonds payable -long term	$1,000	$1,000
Buildings	$1,200	$1,200
Cash	$85	$435
Common Stock ($1 par)	$500	$500
Copyrights	$21	$21
Cost of goods sold	$5,700	$5,800
Depreciation expense	$325	$327
Dividends	$50	$50
Fixtures	$1,800	$2,300
Gain on the sale of land	$0	$75
Goodwill	$110	$110
Income tax expense	$107	$250
Income tax payable	$125	$85
Interest expense	$78	$78
Interest payable	$14	$14
Inventories	$691	$750
Land	$200	$0
Long-term notes payable	$110	$0
Other operating expenses	$690	$650
Prepaid advertising	$65	$85
Retained Earnings	$780	$1,189
Salaries expense	$1,246	$1,250
Salaries payable	$120	$150
Sales	$9,075	$9,425
Short-term investments	$220	$300
Short-term notes payable	$10	$0
Supplies expense	$99	$79

Answer & Explanation Solved by verified expert

See Answer