Question
Gs balance sheets for 2020 & 2021 and income statement for 2021 follow: 2020 2021 Cash $500,000 $800,000 Receivables from customers, net 600,000 600,000 Plant
Gs balance sheets for 2020 & 2021 and income statement for 2021 follow:
2020 2021
Cash $500,000 $800,000
Receivables from customers, net 600,000 600,000
Plant assets 2,800,000 2,902,583
Accumulated depreciation (900,000) (1,002,583)
$3,000,000 $3,300,000
Accounts payable and other accrued liabilities 215,000 200,223
Defined benefit pension obligation 125,000 115,000
Lease liability 0 86,777
Common stock ($1 par value) 100,000 100,000
Additional paid-in-capital, common stock 677,000 677,000
Other comprehensive income 15,000 20,000
Retained earnings 1,868,000 2,101,000
$3,000,000 $3,300,000
Sales 2,950,000
Operating expenses 2,659,000
Income before taxes 291,000
Income tax expense 58,000
Net income $233,000
Additional information for G follows:
- During 2021, G neither purchased nor sold any plant assets.
- Gs plant assets caption on its balance sheet includes Gs right-of-use leased assets.
- On 01-01-21, G leased a machine with a useful life of 4 years. The noncancelable lease agreement required G to make 3 annual lease payments of $50,000 starting 01-01-21. After making the last lease payment, G will retain the machine. Gs borrowing rate on 01-01-21 was 10%. Gs interest expense on its lease is included in the operating expenses caption on its income statement. As of 12-31-21, Gs accrued interest payable on the lease is included in Gs accounts payable and other accrued liabilities caption on its balance sheet.
- G has a defined benefit pension plan. During 2021, G recorded $78,000 of pension expense. Gs pension expense is included in the operating expenses caption on its income statement. During 2021 G made a cash contribution to the pension plan. Gs other comprehensive income caption on its balance sheet relates solely to its other comprehensive income gain/loss on its defined benefit pension plan.
- During 2021, G did not declare or pay dividends on its common stock.
- G uses the direct method and separates its receipts into receipts:
- From customers
- G uses the direct method and separates its payments into payments:
- For other operating expenses
- For income taxes.
Prepare a COMPLETE statement of cash flows for G. Be sure to label your section answers as provided by OR used in. Also, prepare any necessary footnote information/schedule G must present. In your footnote reconciliation of net income to cash flows from operating activities, be specific in your reconciling items. Also, be sure to support your reconciling item amounts with journal entries and/or amortization schedules and/or other supporting calculations that you deem appropriate.
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