Question
On January 1, Year 1, Shelton Company had a balance of $260,500 in its Land account. During Year 1, Shelton sold land that had cost
On January 1, Year 1, Shelton Company had a balance of $260,500 in its Land account. During Year 1, Shelton sold land that had cost $91,500 for $149,000 cash. The balance in the Land account on December 31, Year 1, was $283,500. Required a. Determine the cash outflow for the purchase of land during Year 1.
The comparative balance sheets and an income statement for Raceway Corporation follow:
Balance Sheets As of December 31 | ||||||||
Year 2 | Year 1 | |||||||
Assets | ||||||||
Cash | $ | 69,599 | $ | 38,220 | ||||
Accounts receivable | 28,350 | 20,790 | ||||||
Merchandise inventory | 154,838 | 170,320 | ||||||
Prepaid rent | 2,415 | 4,830 | ||||||
Equipment | 251,530 | 289,290 | ||||||
Accumulated depreciation | (147,270 | ) | (238,990 | ) | ||||
Land | 187,980 | 75,980 | ||||||
Total assets | $ | 547,442 | $ | 360,440 | ||||
Liabilities | ||||||||
Accounts payable (inventory) | $ | 63,333 | 71,840 | |||||
Salaries payable | 30,310 | 25,980 | ||||||
Stockholders equity | ||||||||
Common stock, $50 par value | 244,000 | 199,000 | ||||||
Retained earnings | 209,799 | 63,620 | ||||||
Total liabilities and equity | $ | 547,442 | $ | 360,440 | ||||
Income Statement For the Year Ended December 31, Year 2 | ||||
Sales | $ | 1,500,000 | ||
Cost of goods sold | (797,201 | ) | ||
Gross profit | 702,799 | |||
Operating expenses | ||||
Depreciation expense | (23,040 | ) | ||
Rent expense | (21,840 | ) | ||
Salaries expense | (256,300 | ) | ||
Other operating expenses | (255,440 | ) | ||
Net income | $ | 146,179 | ||
Other Information
- Purchased land for $112,000.
- Purchased new equipment for $95,800.
- Sold old equipment that cost $133,560 with accumulated depreciation of $114,760 for $18,800 cash.
- Issued common stock for $45,000.
Required Prepare the statement of cash flows for Year 2 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
b. Prepare the investing activities section of the Year 1 statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.)
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