GL1201 (Algo) - Based on Exercise 12-11 LO P2, P3, A1 Use the following financial statements and additional information. ARNOLD INCORPORATED Comparative Balance Sheets June 30, 2019 and 2018 Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings Total liabilities and equity Sales Cost of goods sold ARNOLD INCORPORATED Income Statement For Year Ended June 30, 2019 2019 2018 $ 77,900 $ 17,100 73,000 57,000 63,000 88,000 5,800 7,300 219,700 169,400 186,000 $ 360,700 (45,000) $ 26,000 172,000 (15,000) $ 326,400 $ 32,000 19,000 4,400 8,000 4,000 38,000 55,400 33,000 65,000 71,000 120,400 240,000 49,700 170,000 36,000 $ 360,700 $ 326,400 $ 978,000 599,000 379,000 Gross profit Operating expenses Depreciation expense Other expenses Total operating expenses Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income $ 81,000 97,000 $ 178,000 201,000 5,800 206,800 63,300 $ 143,500 Additional Information a. A $32,000 note payable is retired at its $32,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $79,000 cash. d. Received cash for the sale of equipment that had cost $65,000, yielding a $5,800 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of Inventory are on credit. 1 Reconstruct the journal entry for cash receipts from customers, incorporating the change in the related balance sheet account(s), if any. 2 Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any. 3 Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any. 4 Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any. 5 Reconstruct the journal entry for the sale of equipment at a gain, incorporating the change in the related balance sheet account(s), if any. 6 Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any. 7 Reconstruct the entry to record the retirement of the $32,000 note payable at its $32,000 carrying (book) value in exchange for cash. 8 Reconstruct the entry for the purchase of new equipment. 9 Reconstruct the entry for the issuance of common stock. 10 Close all revenue and gain accounts to income summary. 11 Close all expense accounts to income summary. 12 Close Income Summary to Retained Earnings. 13 Reconstruct the journal entry for cash dividends paid. Requirement General Journal General Ledger Trial Balance Direct Method Indirect Method Prepare the Statement of Cash flows for the year ended June 30, 2019 using the Direct account on the General Ledger tab to identify the sources and uses of cash. List ca values. Unadjusted ARNOLD INCORPORATED Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities: Cash flows from investing activities: Cash flows from financing activities: General Requirement Journal General Ledger Trial Balance Direct Method Indirect Method Prepare the operating activities section of the statement of cash flows using the indirect method. En reductions to net cash provided by operating activities as negative values. Unadjusted Cash flows from operating activities: ARNOLD INCORPORATED Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 Adjustments to reconcile net income to net cash provided by operating activities: Income statement items not affecting cash Changes in current operating assets and liabilities Direct Method