Question
Matthauson Company has the following comparative balance sheet data available: 12/31/2019 12/31/2018 Cash $30,000 $80,000 Accounts receivable, net 160,000 100,000 Inventory 100,000 70,000 Prepaid rent
Matthauson Company has the following comparative balance sheet data available:
| 12/31/2019 | 12/31/2018 |
Cash | $30,000 | $80,000 |
Accounts receivable, net | 160,000 | 100,000 |
Inventory | 100,000 | 70,000 |
Prepaid rent | 20,000 | 10,000 |
Total current assets | $310,000 | $260,000 |
Equipment | $400,000 | $200,000 |
Accumulated depreciation | (60,000) | (50,000) |
Total Assets | $650,000 | $410,000 |
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Accounts payable | $50,000 | $40,000 |
Salaries payable | 40,000 | 40,000 |
Bonds payable | 0 | 50,000 |
Common stock, $10 par | 350,000 | 100,000 |
Retained earnings | 210,000 | 180,000 |
Total liabilities & stockholders' equity | $650,000 | $410,000 |
Additional information:
1. The company reports net income of $100,000 and depreciation expense of $20,000 for the year ending December 31, 2019.
2. Dividends declared and paid in 2019, $70,000.
3. Equipment with a cost of $20,000 and accumulated depreciation of $10,000 was sold for $3,000.
4. New equipment was purchased for cash.
5. No common stock was retired during 2019.
The company also reports the following income statement for the year ending December 31, 2019:
Sales |
| $1,000,000 |
Expenses: |
|
|
Cost of goods sold | 600,000 | - |
Salaries expense | 200,000 | - |
Rent expense | 40,000 | - |
Depreciation expense | 20,000 | - |
Interest expense | 3,000 | - |
Loss on sale of equipment | 7,000 | - |
Total Expenses | - | 870,000 |
Income Before Taxes | - | 130,000 |
Income tax expense |
| 30,000 |
Net income |
| $100,000 |
Using the direct method, prepare the statement of cash flows for the year ending December 31, 2019.
Matthauson Company
Statement of Cash Flows
Year Ended December 31, 2019
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B
Carrie Heffernan Company purchased a delivery van on January 1, 2019, for $50,000. The van was expected to remain in service 4 years (or 100,000 miles) and has a residual value of $5,000. The van traveled 30,000 miles the first year, 25,000 miles the second year, and 22,500 miles in the third and fourth years.
Required:
2. Prepare a schedule of the book value of the van for each of the four years using the (a) straight-line method, (b) units-of-production method and (c) double-declining-balance method.
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