Question
LAG Network Inc'.s balance sheet and income statement are as follows: Income Statement Sales $928,600 Cost of goods sold 556,200 Gross profit 372,400 Operating expenses:
LAG Network Inc'.s balance sheet and income statement are as follows: Income Statement Sales $928,600 Cost of goods sold 556,200 Gross profit 372,400 Operating expenses: Depreciation expense $25,200 Other expenses 232,800 Total operating expenses 258,000 Profit from operations $ 114,400 Income taxes 18,600 Profit $ 95,800
Additional information regarding LAG Network Inc'.s activities during 2020. a. Equipment is purchased for $16,000 cash. b. 10,200 common shares are issued for cash at $2.50 per share. c. Declared and paid $50,800 of cash dividends during the year. Other information regarding LAG Network Inc. a. All sales are credit sales. b. All credits to accounts receivable are receipts customers. c. All purchases of merchandise are on credit. d. All debits to account payable result from payments for merchandise. e. Other operating expenses are cash expenses. f. The only decrease in income payable is for payment of taxes.
Prepare a statement of cash flow for 2020 using the direct method to reports the cash inflows and outflows from operating activities.
LAG Network Inc. Comparative Balance Sheet Information Assets December 31 2020 2019 Cash $81,190 $54,400 Accounts receivable 42,400 37,600 Merchandise inventory 284,710 246,800 Equipment 154,400 138,400 Accumulated depreciation (71,800) (46,600) Total assets $490,000 $431,600
Liabilities and equity Accounts payable $ 31,200 $43,800 Income taxes payable 11,600 10,200 Common shares 363,000 337,500 Retained earnings 85,100 40,100 Total liabilities and equity $490,900 $431,600
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