ACC104: Accounting II

Statement of Cash Flows

The comparative balance sheet of Kit Kat Company for December 31, 2019 and 2018, is as follows:

Kit Kat Company Comparative Balance Sheet December 31, 2019 and 2018
Assets	2019	2018
Cash	$140,350	95,900
Accounts receivable (net)	95,300	102,300
Inventories	165,200	157,900
Prepaid expenses	6,240	5,860
Investment (long-term)	35,700	84,700
Land	75,000	90,000
Buildings	375,000	260,000
Accumulated depreciation buildings	(71,300)	(58,300)
Machinery and equipment	428,300	428,300
Accumulated depreciation machinery and equipment	(148,500)	(138,000)
Patents	58,000	65,000
Total Assets	$1,159,290	$1,093,660
Liabilities and Stockholders Equity
Accounts Payable (Merchandise Creditors)	43,500	46,700
Accrued expenses payable (operating expenses)	14,000	12,500
Income taxes payable	7,900	8,400
Dividends payable	14,000	10,000
Mortgage note payable, due in 10 years	40,000	0
Bonds payable	150,000	250,00
Common stock, $30 par	450,000	375,000
Excess of issue price over par common stock	66,250	41,250
Retained earnings	373,640	349,810
Total liabilities and stockholders equity	1,159,290	1,093,660

The income statement for Kit Kat Company follows:

Kit Kat Company Income Statement December 31, 2019
Sales		$1,100,000
Cost of Merchandise sold		710,000
Gross Profit		390,00
Operating expenses:
Depreciation expense	23,500
Patent amortization	7,000
Other operating expenses	196,000
Total Operating expenses		226,500
Income from operations		163,500
Other revenue and expense
Gain on sale of investments	11,000
Interest expense	(26,000)	(15,000)
Income before income tax		148,500
Income tax expense		50,000
Net Income		98,500

An examination of the accounting records revealed the following additional information applicable to 2019:

1. Land costing $15,000 was sold for $15,000
2. A mortgage note was issued for $40,000
3. A building costing $115,000 was constructed
4. 2,500 shares of common stock were issued at $40 in exchange for the bonds payable
5. Cash dividends declared were $74,670

Instructions: