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PA 1 2 - 7 ( Algo ) ( Supplement 1 2 A ) Preparing and Interpreting a Statement of Cash Flows with Loss on
PAAlgoSupplement A Preparing and Interpreting a Statement of Cash Flows with Loss on Disposal Indirect MethodLO S
Heads Up Company was started several years ago by two hockey instructors. The companys comparative balance sheets and income statement follow, along with additional information.
Current Year Previous Year
Balance Sheet at December
Cash $ $
Accounts Receivable
Equipment
Accumulated DepreciationEquipment
Total Assets $ $
Accounts Payable $ $
Salaries and Wages Payable
Notes Payable longterm
Common Stock
Retained Earnings
Total Liabilities and Stockholders Equity $ $
Income Statement
Service Revenue $
Salaries and Wages Expense
Depreciation Expense
Loss on Disposal of Equipment
Income Tax Expense
Net Income $
Additional Data:
Bought new equipment for $ cash and sold existing equipment for $ cash. The equipment that was sold had cost $ and had Accumulated Depreciation of $ at the time of sale.
Borrowed $ cash from the bank during the year.
Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax, assume that this expense was fully paid in cash.
Required:
Prepare the statement of cash flows for the year ended December using the indirect method. Amounts to be deducted should be indicated with a minus sign.
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