Sparkling Cleaner Company reported net income of $7,450 for 2015 but has been showing an overdraft in its bank account in recent months. The manager has contacted you as the auditor for an explanation. The comparative balance sheet was given to you for examination, along with the following information.
(a) Equipment was sold for $1,700, its cost was $3,000, and its book value was $800. The gain was reported as Other Revenue.
(b) Cash dividends of $4,870 were paid.

Instructions:
Prepare a statement of cash flows using the indirect method.

Transcribed Image Text:

Sparkling Cleaner Company Comparative Balance Sheet Dec. 31, 2015 Dec. 31, 2014 Assets Current assets: Cash. Accounts receivable Inventory Prepaid insurance Total current assets (1,100) 4,100 3,250 90 S 6,340 3,950 2,300 1,150 210 $ 7,610 Land, buildings, and equipment: Land Buildings Less: Accumulated depreciation Equipment Less: Accumulated depreciation Total land, buildings, and equipment $15,200 $15,200 35,000 35,000 (16,500 8,500 15,000) $ 24,150 (20,900 7,450 17,900) 20,000 $41,150 $47.490 6,250 $41450 49,060 Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts Income taxes payable Wages payable Notes payable-current portion Total current liabilities 3,600 950 1,100 3,000 S 8,650 2,800 1,850 2,150 4,500 $11,300 payable Long-term liabilities: Notes payable 11,250 14,250 Stockholders' equity: Capital stock. Retained earnings Total stockholders' equty 19,500 8,090 18,000 5,510 27,590 $47,490 23,510 $49,060 Total liabilities and stockholders' equity