Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Heads Up Company was started several years ago by two hockey instructors. The companys comparative balance sheets and income statement follow, along with additional information.

Heads Up Company was started several years ago by two hockey instructors. The companys comparative balance sheets and income statement follow, along with additional information.

Current Year Previous Year
Balance Sheet at December 31
Cash $ 6,180 $ 4,140
Accounts Receivable 910 1,770
Equipment 5,620 5,100
Accumulated DepreciationEquipment (1,510 ) (1,260 )
Total Assets $ 11,200 $ 9,750
Accounts Payable $ 590 $ 1,100
Salaries and Wages Payable 490 750
Note Payable (long-term) 1,500 500
Common Stock 5,100 5,100
Retained Earnings 3,520 2,300
Total Liabilities and Stockholders Equity $ 11,200 $ 9,750
Income Statement
Service Revenue $ 37,700
Salaries and Wages Expense 35,200
Depreciation Expense 510
Loss on Disposal of Equipment 560
Income Tax Expense 210
Net Income $ 1,220

Additional Data:

  1. Bought new equipment for $1,850 cash and sold existing equipment for $510 cash. The equipment that was sold had cost $1,330 and had Accumulated Depreciation of $260 at the time of sale.
  2. Borrowed $1,000 cash from the bank during the year.
  3. Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax, assume that this expense was fully paid in cash.

Required:

1. Prepare the statement of cash flows for the year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Price Of Football Understanding Football Club Finance

Authors: Kieran Maguire

3rd Edition

1788216830, 978-1788216838

More Books

Students also viewed these Accounting questions