Question
Novak Inc., a greeting card company, had the following statements prepared as of December 31, 2017. NOVAK INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31,
Novak Inc., a greeting card company, had the following statements prepared as of December 31, 2017.
NOVAK INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 | ||||||
12/31/17 | 12/31/16 | |||||
Cash | $6,000 | $7,100 | ||||
Accounts receivable | 62,000 | 50,900 | ||||
Short-term debt investments (available-for-sale) | 34,900 | 17,900 | ||||
Inventory | 40,400 | 59,800 | ||||
Prepaid rent | 5,100 | 3,900 | ||||
Equipment | 154,900 | 129,200 | ||||
Accumulated depreciationequipment | (34,900 | ) | (25,200 | ) | ||
Copyrights | 46,200 | 49,500 | ||||
Total assets | $314,600 | $293,100 | ||||
Accounts payable | $46,500 | $40,100 | ||||
Income taxes payable | 4,000 | 6,100 | ||||
Salaries and wages payable | 8,000 | 3,900 | ||||
Short-term loans payable | 8,100 | 10,000 | ||||
Long-term loans payable | 60,600 | 69,200 | ||||
Common stock, $10 par | 100,000 | 100,000 | ||||
Contributed capital, common stock | 30,000 | 30,000 | ||||
Retained earnings | 57,400 | 33,800 | ||||
Total liabilities & stockholders equity | $314,600 | $293,100 |
NOVAK INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017 | ||||
Sales revenue | $340,125 | |||
Cost of goods sold | 174,600 | |||
Gross profit | 165,525 | |||
Operating expenses | 119,000 | |||
Operating income | 46,525 | |||
Interest expense | $11,400 | |||
Gain on sale of equipment | 2,000 | 9,400 | ||
Income before tax | 37,125 | |||
Income tax expense | 7,425 | |||
Net income | $29,700 |
Additional information:
1. | Dividends in the amount of $6,100 were declared and paid during 2017. | |
2. | Depreciation expense and amortization expense are included in operating expenses. | |
3. | No unrealized gains or losses have occurred on the investments during the year. | |
4. | Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2017. |
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
NOVAK INC. Statement of Cash Flows For the Year Ended December 31, 2017 Cash Flows from Operating Activities 29,700 Net Income Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense Amortization of Copyright Gain on Sale of Equipment s Receivabl Decre Acc Decrease in Inventories Decrease in Accounts Payable Increase in Salaries and Wages Payable Decrease in Income Taxes Pavable Increase in Prepaid Rent
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