Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

P 5 . 1 2 L&G Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December 3 1

P5.12 L&G Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December 31,2023:
L&G Inc. Comparative Statement of Financial Position December 31
2023
2022
Cash
$ 57,600
$ 53,850
Accounts receivable
58,000
51,000
Inventory
40,000
60,000
Prepaid rent
5,000
4,000
Equipment
154,000
130,000
Accumulated depreciationequipment
(35,000)
(25,000)
Total assets
$279,600
$273,850
Accounts payable
$ 46,000
$ 40,000
Income tax payable
4,000
6,000
Longterm loans payable
60,000
69,000
Common shares
130,000
130,000
Retained earnings
39,600
28,850
Total liabilities and shareholders equity
$279,600
$273,850
L&G Inc. Income Statement Year Ended December 31,2023
Sales revenue
$368,150
Cost of goods sold
195,000
Gross margin
173,150
Operating expenses
120,000
Operating income
53,150
Interest expense
$11,400
Gain on disposal of equipment
(2,000)
9,400
Income before income tax
43,750
Income tax expense
21,000
Net income
$ 22,750
Additional information:
Dividends on common shares in the amount of $12,000 were declared and paid during 2023.
Depreciation expense of $24,000 is included in operating expenses.
Equipment with a cost of $20,000 that was 70% depreciated was sold during 2023.
Instructions
Prepare a statement of cash flows using the direct method.
Prepare a statement of cash flows using the indirect method.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Anne Britton, Christopher Waterston

3rd Edition

027365859X, 978-0273658597

More Books

Students also viewed these Accounting questions

Question

What is the method of least squares?

Answered: 1 week ago

Question

Illustrate the compensation structure.

Answered: 1 week ago

Question

Describe the steps in an effective performance management system.

Answered: 1 week ago

Question

Define a performance management system.

Answered: 1 week ago