Question
Prepare a 2014 Statement of Cash Flows for the Boyd Company in good form . The operating activities section may be prepared using either the
Prepare a 2014 Statement of Cash Flows for the Boyd Company in good form. The operating activities section may be prepared using either the direct or the indirect method (both result in the same Cash Flow from Operations amounts.
Boyd Company Income Statement - For the year ended 12/31/14
Sales $1,200,000
Cost of Goods Sold ( 690,000)
Gross Margin $ 510,000
Operating Expenses ( 375,000)
Income from Operations $ 135,000
Other Revenue & Expense: Investment Revenue 25,000
Loss on sale of equipment ( 8,000)
Interest Expense ( 7,000)
Income before Tax $ 145,000
Income Tax Expense ( 52,000)
Net Income $ 93,000 =========
Boyd Company Balance Sheet - As of 12/31/14 and 12/31/13
2014 2013
ASSETS
Cash $ 52,400 $ 40,000
Accounts Receivable $58,500 $45,700
Allow for Dbtful Accts ( 1,900) 56,600 ( 1,000) 44,700
Inventory 87,000 63,000
Prepaid Rent 14,000 16,000
Investment in XYZ 310,000 285,000
Equipment $380,000 $266,300
Accumulated Depreciation ( 100,000) 280,000 ( 75,000) 191,300
Total Assets $800,000 $640,000 ======= =======
LIABILITIES & OWNERS EQUITY
Accounts Payable $ 25,000 $ 18,000
Interest Payable 30,000 23,000
Bonds Payable $400,000 $400,000
Premium on Bonds Payable 27,000 427,000 30,000 430,000
Deferred Tax Liability 90,000 75,000
Common Stock 30,000 10,000
Paid in Capital in Excess of Par 80,000 40,000
Retained Earnings 118,000 44,000
Total Liabilities & Owners Equity $800,000 $640,000 ======= =======
See Additional Information on next page.
Additional Information:
1. Equipment with an original cost of $90,000 and accumulated depreciation of $60,000 was sold for cash.
2. Depreciation, amortization, and bad debt expense are included in operating expenses.
3. Boyd accounts for their investment in XYZ using the equity method. XYZ Company paid no cash dividends during 2014.
4. Boyd declared cash dividends during the year. All have been paid by the end of the year.
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