6 Preview File Edit View Go Tools Window Help Wed Mars 12:48 PM V Ac 112 Exam #2.pdf a] Page 3 of 7 Problem 7 30 points Complete a Statement of Cash Flows using the direct method. Use the attached comparative balance sheet, income statement, and the following notations: , Sold equipment for $25,000 cash. . Purchased equipment costing $100,000 with $25,000 cash and $75,000 trade in ofold equipment. '. Bonowed $4,000 cash by signing a note payable. , Paid $41,000 cash to reduce longterm notes payable, . Issued 1,000 shares of common stock at $10 per share. . Declared and paid $7,000 cash dividends. 6 Preview File Edit View Go Tools Window Help Wed Mars 12:48 PM V Ac 112 Exam #2.pdf ED Page 4 of 7 ABC Corp. Comparative Balance Sheet December 31, 2003 003 2002 Assets Current Assets Cash $648,500 $69,000 Accounts Receivable $75,000 $82,500 Merchandise Inventory $235,000 $255,000 Prepaid Expenses $14,500 $16,000 Plant Assets Equipment $252,000 $200,000,, Accumulated Depreciation (Equipment) ($100 000) ($91 000) ' Total Assets $1,125,000 $531,500 1 Liabilities and Equity Current Liabilities Accounts Payable $18,500 $95,500 LongTerm Liabilities Notes Payable $88,000 $75,000 Eguity Common Stock, $10 Par $210,000 $200,000 Contributed Capital $25,000 $0 2 4 a 5 Retained Earnings $783,500 $161,000 Total Liabilities and Equity $1,125,000 $531,500 "a ee'iaemsnemeun @ Men use Preview File Edit View Go Tools Window Help Q 8 Wed Mar 8 12:48 PM AC 112 Exam #2.pdf Q Q 1 2 ~ ' Q Q Search Page 5 of 7 AC 112 Exam #... ABC Corp. Income Statement For the Year Ended December 31, 2003 Sales $1,560,000 3 Cost of Goods Sold ($525,000) Gross Profit $1,035,000 Operating Expenses Depreciation Expense $42,000 Other Expenses $350,000 Total operating expenses ($392,000) Other gains (losses) Loss on Sale of Equipment ($2,500) Income before taxes $640,500 Income taxes ($23,500) Net Income $617,000 5 + MAR 2 T - 8 "tv A6 Preview File Edit View Go Tools Window Help V AC112Exam#2.pdf ' ED mam ABC Corp. Statement of Cash Flows (Direct Method) For the Year Ended December 31, 2003 Cash Flows from Operating Activities: 3 Cash received from customers Cash paid for merchandise Cash paid for other expenses Cash paid for income taxes Net cash provided by operating activities Cash flows from investing activities: Cash received from sale of equipment Cash paid for equipment 4 5 Cash paid for dividends Net cash used for financing activities Net increase in cash Cash beginning balance 2003 Cash ending balance 2003 Net cash used in investing activities Cash flows from financing activities: Cash borrowed on short-term note Cash paid on longterm note Cash received from issuing stock 6 "a ~aa'7i'iI column @ Are" age Wed Mar 8 12:48 PM Preview File Edit View Go Tools Window Help GOD Q 8 Wed Mar 8 12:48 PM AC 112 Exam #2.pdf Q Search Page 7 of 7 AC 112 Exam #... Statement of Cash Flows Income Statement Comparitive Balance Sheet Direct Method Cash received from customers= Sales + Decrease in A/R - Increase in A/R Cash paid for merchandise= COGS + Increase in Merchandise + Decrease in A/P - Decrease in Merchandise - Increase in A/P Cash paid for other operating expenses= Other Expenses + Increase in Prepaid + Decrease in Accruals - Decrease in Prepaid - Increase in Accruals Cash paid for interest = Interest Expense + Decrease in Interest Payable - Increase in Interest Payable Cash paid for taxes= Tax Expense + Decrease in Taxes Payable - Increase in Taxes Payable 6 7 + MAR 2 T - 8