50.1K

Verified Solution

Link Copied!

Problem 1: Using the information below, prepare the operating section of the statement of cash flows using the direct method. Then prepare a full statement of cash flows using the indirect method. Assume all inventory purchases are on account and that that is the only expense charged to Accounts Payable. Balance Sheet Information Income Statement Information 2021 2020 Assets Revenue 212,000 Cash 24,850 51,500 COGS 137,800 Accounts Receivable 94,000 23,000 Gross Profit 74,200 Inventory 12,400 18,900 Operating Expenses Prepaids 14,200 11,200 Depreciation Expense 10,250 Investments 12,500 Wages Expense 30,000 Equipment 90,300 105,300 Supplies Expense 2,100 Accum. Depreciation (30,750) (32,500) Rent Expense 15,700 Total Assets 205,000 189,900 Insruance Expense 1,600 Liabilities & Equity Interest Expense 700 Accounts Payable 27,950 4,700 Operating Income 13,850 Wages Payable 23,000 35,000 Other Gains and Losses Income Taxes Payable 3,270 12,500 Gain on Sale of Equiment 5,000 Notes Payable 18,000 18,000 Loss on Sale of investments 2,500 Total Liabilities 72,220 70,200 Income Before Taxes 16,350 Common Stock 24,000 24,000 Income Tax Expense 3,270 APIC - Common Stock 12,000 12,000 Net Income 13,080 Retained Earnings 96,780 83,700 Total Liabilities & Equity 205,000 189,900 Additional Information: Purchased inventory valued at $32,000. Sold equipment costing $15,000, with a book value of $3,000, for $8,000. Sold investments with a cost of $12,500 for $10,000

Answer & Explanation Solved by verified expert

See Answer