Question
LuluCo reported the following on its 2014 income statement. Using the income statement and the balance sheet given below, prepare the statement of cash flows
LuluCo reported the following on its 2014 income statement. Using the income statement and the balance sheet given below, prepare the statement of cash flows using the indirect method. Ignore required disclosures for cash flows associated with interest paid and received, dividends paid and received and income taxes as well as any non-cash disclosures that may have occurred in the current year.
Analysis of accounts:
1) Retired bonds, paid $11,500
2) Sold HTM investment in Lala Consulting common shares for $11,500
3) Purchased equipment $57,000 cash
4) Sold furniture, and settled in cash.
5) Purchased HFT investments $3,000 cash. This companys HFT investments are not readily convertible to a known amount of cash but will be traded within 12 months.
6) Paid cash dividends
7) Issued common shares, 2,300 shares at $5 per share.
8) Changes in other balance sheet accounts resulted from usual transactions and events
LuluCo | |||
Income Statement | |||
For the year ended December 31, 2014 | |||
Sales | $515,000 | ||
Operating expenses | |||
Cost of goods sold | 257,500 | ||
Depreciation expense | 10,000 | ||
Interest expense | 4,725 | ||
Amortization expense | 19,000 | ||
Other operating expenses | 97,600 | 388,825 | |
Other revenues and expenses | |||
Loss on sale of HTM investments | -1,000 | ||
Net income | $125,175 | ||
LuluCo | |||
Balance Sheet | |||
As of December 31, 2014 | 2014 | 2013 | |
Cash | $16,000 | $31,500 | |
Investments (held for trading | 61,000 | 58,000 | |
Accounts receivable, net | 72,500 | 89,000 | |
Inventory | 69,500 | 82,000 | |
HTM investments | 43,000 | 55,500 | |
Property, plant, equipment, net | 117,000 | 120,000 | |
Patent, net | 34,000 | 53,000 | |
Total assets | $413,000 | $489,000 | |
Accounts payable | $68,500 | $78,000 | |
Salaries payable | 53,500 | 43,000 | |
Short-term notes payable | 122,000 | 139,500 | |
Bonds payable | 83,000 | 94,500 | |
Common shares | 39,000 | 27,500 | |
Retained earnings | 47,000 | 106,500 | |
Total liabilities and shareholders' equity | $413,000 | $489,000 | |
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