Question
Going for Broke Limiteds 2020 and 2021 balance sheets included the following items: December 31 Debits 2021 2020 Cash ............................................................................................. $10,500 $ 4,000 Accounts receivable.....................................................................
Going for Broke Limiteds 2020 and 2021 balance sheets included the following items:
| December 31 | |
Debits | 2021 | 2020 |
Cash ............................................................................................. | $10,500 | $ 4,000 |
Accounts receivable..................................................................... | 8,000 | 9,000 |
Merchandise inventory................................................................ | 21,000 | 18,000 |
Equipment..................................................................................... | 18,000 | 15,000 |
Totals.................................................................................. | $57,500 | $46,000 |
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Credits |
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Accumulated depreciation, equipment...................................... | $ 4,000 | $ 3,000 |
Accounts payable......................................................................... | 7,000 | 5,000 |
Taxes payable............................................................................... | 1,000 | 2,000 |
Dividends payable........................................................................ | 1,500 | 0 |
Common shares, no-par value................................................... | 33,000 | 30,000 |
Retained earnings........................................................................ | 11,000 | 6,000 |
Totals.................................................................................. | $57,500 | $46,000 |
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Going for Broke Limiteds income statement was as follows:
Going for Broke Limited Income Statement For the Year Ended December 31, 2021 | ||
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Sales ............................................................................................. |
| $61,000 |
Cost of goods sold....................................................................... | $40,000 |
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Wages and other operating expenses...................................... | 6,300 |
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Income taxes expense................................................................. | 4,200 |
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Depreciation expense.................................................................. | 1,500 | 52,000 |
Net income.................................................................................... |
| $ 9,000 |
Required:
Prepare the statement of cash flows in good form for the year ended December 31, 2021 under the indirect method. Additional information includes the following:
- Equipment costing $3,500 was purchased during the year.
- Fully depreciated equipment that cost $500 was discarded and its cost and accumulated depreciation were removed from the accounts.
- Two hundred common shares were sold and issued at $15 per share.
- The company declared $4,000 of cash dividends and paid $2,500.
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