PROBLEM #1 Direct Method $ effect CASH ACCOUNTS REC. INVENTORY LAND EQUIPMENT AD 12/31/2014 12/31/2013 10,000 6,500 27,000 33,000 83,000 75,000 78,000 202,600 149,400 (30,000) (25,000) 292,600 316 900 CHANGE 3,500 6,000) 8,000 78,000) 53,200 (5,000) ACCOUNTS PAYABLE ACCRUED LIABILITIES WAGES PAYABLE NOTES PAYABLE COMMON STOCK RETAINED EARNINGS 32,000 5,000 9,000 17,000 114,600 115,000 292,600 48,450 4,300 8,150 42,000 114,000 100,000 316,900 (16 450) 700 850 (25,000) 600 15,000 Land sold for $94,000 Cash Adj. Collections Interest received To suppliers Income Statement: Sales revenue Interest revenue Gain on Sale COGS Other operating expense Salaries expense Interest expense Income tax expense Depreciation expense Net Income 315,000 4,000 16,000 (200,000) (50,000) (40,000) (9,000) (2,000) (5,000) 29,000 To employees For interest For taxes Net Cash PROBLEM #1 Direct Method