INFORMATION

PART A: JOURNAL ENTRIES

PART B: DIRECT METHOD

PART C: INDIRECT METHOD

GL1201 - Based on Exercise 12-11 LO P2, P3, A1 Use the following financial statements and additional information. 2018 EDMUNDS INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $ 146,400 Accounts receivable, net 68,000 Inventory 69,000 Prepaid expenses 4,700 Total current assets 288, 100 Equipment 140,000 Accum. depreciation-Equipment (36,000) Total assets $392,100 Liabilities and Equity Accounts payable $ 33,000 Wages payable 8,000 Income taxes payable 4,300 Total current liabilities 45,300 Notes payable (long term) 43,000 Total liabilities 88,300 Equity Common stock, $5 par value 250,000 Retained earnings 53,800 Total liabilities and equity $392,100 $ 95,900 53,000 96,000 5,900 250,800 130,000 (12,000) $368,800 $ 40,000 20,000 4,800 64,800 85,000 149,800 180,000 39,000 $368,800 EDMUNDS INC. Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 64,000 Other expenses 72,000 Total operating expenses $ 742,000 454,000 288,000 136,000 152,000 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,500 154,500 47,290 $107,210 Additional Information a. A $43,000 note payable is retired at its $43,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $63,000 cash. d. Received cash for the sale of equipment that had cost $53,000, yielding a $2,500 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of inventory are on credit. 1 Reconstruct the journal entry for cash receipts from customers, incorporating the change in the related balance sheet account(s), if any. Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any. 3 Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any. 4 Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any. 5 Reconstruct the journal entry for the sale of equipment at a gain, incorporating the change in the related balance sheet account(s), if any. 6 Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any. 7 Reconstruct the entry to record the retirement of the $43,000 note payable at its $43,000 carrying (book) value in exchange for cash. 8 Reconstruct the entry for the purchase of new equipment. 9 Reconstruct the entry for the issuance of common stock. 10 Close all revenue and gain accounts to income summary. 11 Close all expense accounts to income summary. 12 Close Income Summary to Retained Earnings. 13 Reconstruct the journal entry for cash dividends paid. Prepare the Statement of Cash flows for the year ended June 30, 2019 using the Direct Method. Hint Use the Cash T- account on the General Ledger tab to identify the sources and uses of cash. List cash outflows as negative values. Unadjusted - EDMUNDS INC. Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities: Cash received from customers Cash paid for merchandise Cash paid for operating expenses Cash paid for income taxes Cash flows from investing activities: Cash flows from financing activities: Prepare the operating activities section of the statement of cash flows using the indirect method. Enter reductions to net cash provided by operating activities as negative values. Unadjusted EDMUNDS INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 Cash flows from operating activities: Adjustments to reconcile net income to net cash provided by operating activities: