Problem $3(80$ points$)$

Use the following information to prepare a statement of cash flows using the direct and indirect methods.

Cash Flow Statement

Credit

Credit

Sold equipment for $$25,000$ cash.

Purchased equip. costing $$100,000$ with $$25,000$ cash and $$75,000$ trade in of old equip. Borrowed $$4,000$ cash by signing a note payable.

Paid $$41,000$ cash to reduce long$-$term notes payable.

Issued $1,000$ shares of common stock at $$10$ per share.

Declared and paid $$7,000$ cash dividends.

ABC Corp.

Comparative Balance Sheet

December $31,2023$

$20232022$

Assets

Current Assets

Cash $$648,500$ $$69,000$

Accounts Receivable $$75,000$ $$82,500$

Merchandise Inventory $$235,000$ $$255,000$

Prepaid Expenses $$14,500$ $$16,000$

Plant Assets

Equipment $$252,000$ $$200,000$

Accumulated Depreciation $($Equipment$)($$$100,000)($$$91,000)$

Total Assets $$1,125,000$ $$531,500$

Liabilities and Equity

Current Liabilities

Accounts Payable $$18,500$ $$95,500$

Long$-$Term Liabilities

Notes Payable $$88,000$ $$75,000$

Equity

Common Stock, $$10$ Par $$210,000$ $$200,000$

Contributed Capital $$25,000$ $$0$

Retained Earnings $$783,500$ $$161,000$

Total Liabilities and Equity $$1,125,000$ $$531,500$

ABC Corp.

Income Statement

For the Year Ended December $31,2023$

Sales $$1,560,000$

Cost of Goods Sold $($$$525,000)$

Gross Profit $$1,035,000$

Operating Expenses

Depreciation Expense $$42,000$

Other Expenses $$350,000$

Total operating expenses $($$$392,000)$

Other gains $($losses$)$

Loss on Sale of Equipment $($$$2,500)$

Income before taxes $$640,500$

Income taxes $($$$23,500)$

Net Income $$617,000$