Question
I need help answering the following question: Question 1.) Make a statement of Cash Flows using the direct method. Use the attached comparative balance sheet,
I need help answering the following question:
Question 1.)
Make a statement of Cash Flows using the direct method. Use the attached comparative balance sheet, income statement, and the following notations:
Part 1:
A. Sold equipment for $25,000 cash.
B. Purchased equipment costing $100,000 with $25,000 cash and $75,000 trade in of old equipment.
C. Borrowed $4,000 cash by signing a note payable.
D. Paid $41,000 cash to reduce long-term notes payable.
E. Issued 1,000 shares of common stock at $10 per share.
F. Declared and paid $7,000 cash dividends.
Part 2:
ABC Corp.
Comparative Balance Sheet
December 31, 2003
Assets 2003 2002
Current Assets :
Cash $648,500 $69,000
Accounts Receivable $75,000 $82,500
Merchandise Inventory $235,000 $255,000
Prepaid Expenses $14,000 $16,000
Plant Assets :
Equipment $252,000 $200,000
Accumulated Depreciation $100,000 $91,000
Total Assets: $1,225,000 $531,500
Liabilities and Equity 2003 2002
Current Liabilities:
Accounts receivable $18,500 $95,500
Long-Term Liabilities:
Notes Payable $88,000 $75,000
Equity:
Common Stock, $10 Par $210,000 $200,000
Contributed Capital $25,000 $0
Retained Earnings $783,5000 $161,000
Total Liabilities and Equity: $1,125,000 $531,500
Part 3:
ABC Corp.
Income Statement
For the Year Ended December 31, 2003
Sales = $1,560,000
Cost of Goods Sold = $525,000
Gross Profit = $1,035,000
Operating Expenses:
Depreciation Expense = $42,000
Other Expenses = $350,000
Total Operating Expenses = $392,000
Other Gains (Losses)
Loss on Sale of Equipment = $2,500
Income Before Taxes = $640,500
Income Taxes = $23,500
Net Income = $617,000
Part 4:
ABC Corp.
Statement of Cash Flows (Direct Method)
For the Year Ended December 31, 2003
Cash Flows from Operating Activities:
Cash received from customers =
Cash paid for merchandise =
Cash paid for other expenses =
Cash paid for income taxes =
Net cash provided by operating activities =
Cash flows from investing activities:
Cash received from sale of equipment =
Cash paid for equipment =
Net cash used in investing activities =
Cash flows from financing activities:
Cash borrowed on short-term note =
Cash paid on long-term note =
Cash received from issuing stock =
Cash paid for dividends =
Net cash used for financing activities =
Net cash increase =
Cash beginning balance 2003 =
Cash ending balance 2003 =
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