I need help with this question (you can find it attached also)

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Homework #3

Part I. Use the information below on Great Lakes Electric Corporation to answer questions 1-3 in

Part I.

Great Lakes Electric Corporation manufactures a variety of power tools. An income statement and

comparative balance sheets for the 2011 fiscal year are provided below.

Notes:

a) Accounts Receivable arise only from sales to customers, and Accounts Payable from purchases of

Inventory. Movements in the Retained Earnings account are entirely attributable to Net Income

and the declaration of dividends.

b) Proceeds from the disposal of Buildings and Equipment were 80 in 2011.

c) The company rents various properties from their respective owners. Some rental agreements

stipulate that payment be made in advance of the rental term, giving rise to Prepaid Rent. Other

agreements allow the company to make rental payments after some period of occupancy has

occurred, giving rise to Rent Payable.

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INCOME STATEMENT

Great Lakes Electric Corp.

December 31, 2011

2011

Sales 1,500

Cost of Goods Sold (700)

Salaries Expense (160)

Rent Expense (145)

Depreciation (60)

Operating Income 435

Interest Expense (75)

Loss on Sale of Equipment (30)

Income before Taxes 330

Taxes (120)

Net Income 210

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BALANCE SHEET

Great Lakes Electric Corp.

December 31, 2011

2011 2010

Assets

Cash 100 90

Accounts Receivable 210 170

Merchandise Inventory 300 330

Prepaid Rent 130 80

Buildings and Equipment 1,500 1,400

Less: Accumulated Depreciation (390) (370)

Total Assets 1,850 1,700

Liabilities and Shareholders Equity

Accounts Payable 200 255

Dividends Payable 15 25

Rent Payable 80 100

Long-term Debt 750 750

Common Stock (no par) 435 300

Retained Earnings 370 270

Total Liabilities and Shareholders Equity 1,850 1,700

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Question 1

Compute cash collected by Great Lakes Electric Corporation from customers in 2011.

A) 40

B) 1,460

C) 1,500

D) 1,540

E) None of the above

Question 2

Compute inventory purchases made during 2011 by Great Lakes Electric Corporation.

A) 30

B) 700

C) 6,370

D) 6,970

E) 7,000

F) None of the above

Question 3

Compute Great Lakes Electric Corporations cash flow from operations using the indirect method during

2011.

A) 165

B) 210

C) 240

D) 300

E) None of the above

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Part II. Use the information below on XS Supply Corp. to answer questions 4-5 in Part II.

XS Supply Company is developing its annual financial statements at December 31, 2011. The statements

are complete except for the statement of cash flows. The completed comparative balance sheets and

income statement are summarized:

Balance sheet at December 31 2011 2010

Cash $ 34,000 $ 29,000

Accounts receivable 35,000 28,000

Merchandise inventory 41,000 38,000

Property and equipment 121,000 100,000

Less: Accumulated depreciation (30,000) (25,000)

$201,000 $170,000

Accounts payable $ 36,000 $ 27,000

Wages payable 1,200 1,400

Note payable, long-term 38,000 44,000

Contributed capital 88,600 72,600

Retained earnings 37,200 25,000

$201,000 $170,000

Income Statement for 2011

Sales $120,000

Gain on sale of equipment 1,000

Cost of goods sold 70,000

Other expenses 38,800

Net Income $ 12,200

Additional data:

a) Bought equipment for cash, $31,000. Sold equipment with original cost of $10,000, accumulated

depreciation of $7,000, for $4,000 cash.

b) Paid $6,000 on the long-term note payable.

c) Issued new shares of stock for $16,000 cash.

d) No dividends were declared or paid.

e) Other expenses included depreciation, $12,000; wages, $13,000; taxes, $6,000; and other, $7,800.

f) Accounts payable includes only inventory purchases made on credit. Because there are no

liability accounts relating to taxes and other expenses, assume these expenses were fully paid in

cash.

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Question 4

Prepare the statement of cash flows for the year ended December 31, 2011, using the indirect method.

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Question 5

Write a short paragraph explaining the major sources and uses of cash.

Section: Name: Homework #3 Part I. Use the information below on Great Lakes Electric Corporation to answer questions 1-3 in Part I. Great Lakes Electric Corporation manufactures a variety of power tools. An income statement and comparative balance sheets for the 2011 fiscal year are provided below. Notes: a) Accounts Receivable arise only from sales to customers, and Accounts Payable from purchases of Inventory. Movements in the Retained Earnings account are entirely attributable to Net Income and the declaration of dividends. b) Proceeds from the disposal of Buildings and Equipment were 80 in 2011. c) The company rents various properties from their respective owners. Some rental agreements stipulate that payment be made in advance of the rental term, giving rise to Prepaid Rent. Other agreements allow the company to make rental payments after some period of occupancy has occurred, giving rise to Rent Payable. Page 1 of 7 Section: Name: INCOME STATEMENT Great Lakes Electric Corp. December 31, 2011 2011 Sales 1,500 Cost of Goods Sold (700) Salaries Expense (160) Rent Expense (145) Depreciation (60) Operating Income 435 Interest Expense (75) Loss on Sale of Equipment (30) Income before Taxes 330 Taxes Net Income (120) 210 Page 2 of 7 Section: Name: BALANCE SHEET Great Lakes Electric Corp. December 31, 2011 2011 2010 Assets Cash 100 90 Accounts Receivable 210 170 Merchandise Inventory 300 330 Prepaid Rent 130 80 1,500 1,400 (390) (370) 1,850 1,700 Accounts Payable 200 255 Dividends Payable 15 25 Rent Payable 80 100 Long-term Debt 750 750 Common Stock (no par) 435 300 Retained Earnings 370 270 1,850 1,700 Buildings and Equipment Less: Accumulated Depreciation Total Assets Liabilities and Shareholders' Equity Total Liabilities and Shareholders' Equity Page 3 of 7 Section: Name: Question 1 Compute cash collected by Great Lakes Electric Corporation from customers in 2011. A) B) C) D) E) 40 1,460 1,500 1,540 None of the above Question 2 Compute inventory purchases made during 2011 by Great Lakes Electric Corporation. A) B) C) D) E) F) 30 700 6,370 6,970 7,000 None of the above Question 3 Compute Great Lakes Electric Corporation's cash flow from operations using the indirect method during 2011. A) B) C) D) E) 165 210 240 300 None of the above Page 4 of 7 Section: Name: Part II. Use the information below on XS Supply Corp. to answer questions 4-5 in Part II. XS Supply Company is developing its annual financial statements at December 31, 2011. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: Balance sheet at December 31 Cash Accounts receivable Merchandise inventory 2011 $ 34,000 35,000 41,000 2010 $ 29,000 28,000 38,000 Property and equipment 121,000 100,000 Less: Accumulated depreciation (30,000) (25,000) $201,000 $170,000 Accounts payable Wages payable $ 36,000 1,200 $ 27,000 1,400 Note payable, long-term Contributed capital Retained earnings 38,000 88,600 37,200 $201,000 44,000 72,600 25,000 $170,000 Income Statement for 2011 Sales Gain on sale of equipment Cost of goods sold Other expenses Net Income $120,000 1,000 70,000 38,800 $ 12,200 Additional data: a) Bought equipment for cash, $31,000. Sold equipment with original cost of $10,000, accumulated depreciation of $7,000, for $4,000 cash. b) Paid $6,000 on the long-term note payable. c) Issued new shares of stock for $16,000 cash. d) No dividends were declared or paid. e) Other expenses included depreciation, $12,000; wages, $13,000; taxes, $6,000; and other, $7,800. f) Accounts payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes and other expenses, assume these expenses were fully paid in cash. Page 5 of 7 Section: Name: Question 4 Prepare the statement of cash flows for the year ended December 31, 2011, using the indirect method. Page 6 of 7 Section: Name: Question 5 Write a short paragraph explaining the major sources and uses of cash. Page 7 of 7