Question
Q3: Statement of cashflows Presented below are the 2020 income statement and comparative balance sheet information for Siegfried & Royce (S&G). Siegfried & Royce Income
Q3: Statement of cashflows
Presented below are the 2020 income statement and comparative balance sheet information for Siegfried & Royce (S&G).
Siegfried & Royce Income Statement |
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For the Year Ended December 31, 2020 |
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($ in thousands) |
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Sales revenue | $12,500 | |
Operating expenses: |
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Cost of goods sold $7,300 |
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Depreciation 400 |
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Rent 250 |
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Administrative and other 2,200 |
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Total operating expenses | 10,150 | |
Income before income taxes | 2,350 | |
Income tax expense | 940 | |
Net income | $ 1,410 | |
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Balance Sheet information ($ in thousands) | Dec. 31, 2020 | Dec. 31, 2019 |
Assets: |
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Cash | $3,280 | $1,300 |
Accounts receivable | 1,250 | 980 |
Inventory | 980 | 900 |
Prepaid rent | 150 | 100 |
Plant & equipment | 3,000 | 2,600 |
Less: Accumulated depreciation | (1,200) | (800) |
Total assets | $7,460 | $5,080 |
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Liabilities and shareholders equity: |
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Accounts payable | $ 500 | $ 580 |
Payables for administrative and other expenses | 650 | 700 |
Income taxes payable | 450 | 350 |
Note payable (due 12/31/2017) | 2,500 | 2,000 |
Common stock | 1,500 | 1,000 |
Retained earnings | 1,860 | 450 |
Total liabilities and shareholders equity | $7,460 | $5,080 |
Required:
- Prepare S&Gs 2020 statement of cash flows, using the indirect method to present cash flows from operating activities.
- Prepare the cash flows from operating activities section of S&Gs 2020 statement of cash flows using the direct method. Assume that all purchases and sales of inventory are on account, and that there are no anticipated bad debts for accounts receivable.
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