Question
McKillop Corporation, a private corporation following ASPE, prepared the following income statement and comparative balance sheet for the year ended December 31, 2020: MCKILLOP CORPORATION
McKillop Corporation, a private corporation following ASPE, prepared the following income statement and comparative balance sheet for the year ended December 31, 2020:
MCKILLOP CORPORATION
Comparative Balance Sheet
December 31, 2020
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Assets
20202019
Cash..............................................................................................$ 74,700$ 35,000
Accounts receivable......................................................................104,00067,000
Inventory........................................................................................100,000112,000
Prepaid expenses..........................................................................32,00036,000
Long-term investments..................................................................81,00066,000
Property, plant, and equipment.....................................................235,000175,000
Accumulated depreciation.............................................................(65,000)(60,000)
Total........................................................................................$561,700$431,000
Liabilities and Shareholders' Equity
Accounts payable..........................................................................$93,000$75,000
Income taxes payable...................................................................29,00024,000
Bonds payable...............................................................................135,000160,000
Common shares............................................................................240,00091,000
Retained earnings.........................................................................64,70081,000
Total........................................................................................$561,700$431,000
MCKILLOP CORPORATION
Income Statement
Year Ended December 31, 2020
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Sales..............................................................................................$500,000
Expenses
Cost of goods sold..................................................................$295,000
Operating expenses...............................................................65,000
Depreciation expense............................................................17,000
Interest expense.....................................................................18,000
Loss on sale of equipment.....................................................3,000398,000
Income before income tax.............................................................102,000
Income tax expense......................................................................15,300
Profit..............................................................................................$86,700
Page 14
Additional information regarding the 2020 fiscal year:
1.New equipment costing $85,000 was purchased for cash.
2.Old equipment costing $25,000 was sold for $10,000 cash when the carrying amount (net book value) was $13,000.
3.Bonds were originally issued at face value. Bonds with a face value of $25,000 were converted into $25,000 of common shares during the year.
4.Cash dividends were declared and paid during the year.
Instructions:
Prepare Cash Flow Statement for the year ended December 31, 2020 using the indirect method.
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