GL1601 (Algo) - Based on Exercise 16-11 LO P2, P3, A1 Use the following financial statements and additional information. FAIRHAVEN INCORPORATED Comparative Balance Sheets June 30, 2019 and 2018 2019 2018 $ 77,000 83,000 69,000 6,200 235, 200 199,000 (51, ) $ 383,200 $ 25,500 65,000 96, eee 7,700 194,200 184,000 (17,000) $ 361,200 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 $ 33,000 7,000 4,700 44,700 43,000 87,700 $ 40,000 18, eee 5,200 63,200 85, eee 148, 2ee 250,000 45,500 $ 383,200 180, eee 33,000 $361,200 FAIRHAVEN INCORPORATED Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 89,000 Other expenses 105,000 Total operating expenses $ 1,059,000 648, eee 411,000 $ 194,000 217,000 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 7.30e 224,300 68,660 $ 155,640 Additional Information a. A $42,000 note payable is retired at its $42,000 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 $87,000 cash. d. Received cash for the sale of equipment that had cost $72,000, yielding a $7,300 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. No Date Account Title Debit Credit 1 June 30 Cash Accounts receivable, net Sales 1,059,000 2 June 30 Cost of goods sold Accounts payable Inventory Cash 3 June 30 Depreciation expense Accumulated depreciation - Equipment 4 June 30 Other expenses Wages payable Prepaid expenses Cash 5 June 30 Cash Accumulated depreciation - Equipment Equipment Gain on sale of equipment 6 June 30 Income taxes expense Income taxes payable Cash 7 June 30 Notes payable (short-term) Cash 8 June 30 Equipment Cash 9 June 30 Cash Common stock, $5 par value 10 June 30 Sales Gain on sale of equipment Income summary 11 June 30 Income summary Cost of goods sold Depreciation expense 10 June 30 Sales Gain on sale of equipment Income summary 11 June 30 Income summary Cost of goods sold Depreciation expense Other expenses Income taxes expense 12 June 30 Income summary Retained earnings 13 June 30 Retained earnings Cash Post-closing General Ledger Account Cash Debit Accounts receivable, net Debit Credit No. Credit No. Date June 30 Balance 25,500 Date June 30 Balance 65,000 Inventory Prepaid expenses Debit Credit No. Debit Credit No. Date June 30 Balance 96,000 Date June 30 Balance 7,700 Equipment Debit No. Credit No. Date June 30 Balance 184,000 Accumulated depreciation - Equipment Date Debit Credit June 30 Balance 17,000 Accounts payable Wages payable Debit Credit No. Debit Credit No. Date June 30 Balance 40,000 Date June 30 Balance 18,000 Income taxes payable Debit Credit Notes payable (long-term) Debit Credit No. No. Date June 30 Balance 5,200 Date June 30 Balance 85,000 Common stock, $5 par value Date Debit Credit June 30 Retained earnings Debit Credit No. No. Balance 180,000 Date June 30 Balance 33,000 Sales No. Debit Credit Balance Date June 30 June 30 0 4 1 1,059,000 1,059,000 Begin by selecting "Post-closing" from the drop-down menu. Verify that each balance agrees with the June 30, 2019 balance sheet above. Post-closing FAIRHAVEN INCORPORATED Trial Balance June 30, 2021 Account Title Credit Cash $ Debit 25,500 65,000 96,000 7,700 184,000 Accounts receivable, net Inventory Prepaid expenses Equipment Accumulated depreciation - Equipment Accounts payable Wages payable Income taxes payable Notes payable (long-term) Common stock, $5 par value Retained earnings Sales 17,000 40,000 18,000 5,200 85,000 180,000 33,000 1,059,000 1,437,200 Total 378,200 $ 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 Method. Hint Use the Cash T- account on the General Ledger tab to identify the sources and uses of cash. List cash outflows as negative values. Post-closing FAIRHAVEN INCORPORATED Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities: Cash received from customers Cash paid for equipment Cash paid for operating expenses Cash paid for income taxes Net income Cash flows from investing activities: Amortization expense Cash flows from financing activities: Requirement General Journal General Ledger Trial Balance Direct Method Indirect Method Prepare the operating activities section of the statement of cash flows using the indirect method. Enter reductions to net cash provided by operating activities as negative values. Post-closing FAIRHAVEN INCORPORATED Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 Cash flows from operating activities: 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