Question 5

Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Chapman as of May 31, 2014, are as follows. The company is preparing its statement of cash flows.

CHAPMAN COMPANY COMPARATIVE BALANCE SHEET AS OF MAY 31
2014	2013
Current assets
Cash	$28,500	$20,480
Accounts receivable	75,970	58,490
Inventory	220,790	250,840
Prepaid expenses	9,728	7,600
Total current assets	334,988	337,410
Plant assets
Plant assets	600,710	502,110
Less: Accumulated depreciation?plant assets	150,360	125,750
Net plant assets	450,350	376,360
Total assets	$785,338	$713,770
Current liabilities
Accounts payable	$123,990	$115,220
Salaries and wages payable	47,720	72,640
Interest payable	27,160	25,500
Total current liabilities	198,870	213,360
Long-term debt
Bonds payable	70,040	100,090
Total liabilities	268,910	313,450
Stockholders? equity
Common stock, $10 par	370,570	280,710
Retained earnings	145,858	119,610
Total stockholders? equity	516,428	400,320
Total liabilities and stockholders? equity	$785,338	$713,770

CHAPMAN COMPANY INCOME STATEMENT FOR THE YEAR ENDED MAY 31, 2014
Sales revenue	$1,255,540
Cost of goods sold	722,970
Gross profit	532,570
Expenses
Salaries and wages expense	252,910
Interest expense	75,310
Depreciation expense	24,610
Other expenses	8,580
Total expenses	361,410
Operating income	171,160
Income tax expense	43,340
Net income	$127,820

The following is additional information concerning Chapman?s transactions during the year ended May 31, 2014.

1.	All sales during the year were made on account.
2.	All merchandise was purchased on account, comprising the total accounts payable account.
3.	Plant assets costing $98,600 were purchased by paying $24,600 in cash and issuing 7,400 shares of stock.
4.	The ?other expenses? are related to prepaid items.
5.	All income taxes incurred during the year were paid during the year.
6.	In order to supplement its cash, Chapman issued 1,586 shares of common stock at par value.
7.	Cash dividends of $101,572 were declared and paid at the end of the fiscal year.

Question 5 Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Chapman as of May 31, 2014, are as follows. The company is preparing its statement of cash flows. CHAPMAN COMPANY COMPARATIVE BALANCE SHEET AS OF MAY 31 2014 2013 $28,500 $20,480 Current assets Cash Accounts receivable 75,970 58,490 220,790 250,840 9,728 7,600 334,988 337,410 Plant assets 600,710 502,110 Less: Accumulated depreciationplant assets 150,360 125,750 Inventory Prepaid expenses Total current assets Plant assets Net plant assets 450,350 376,360 $785,338 Total assets $713,770 $123,990 $115,220 Current liabilities Accounts payable Salaries and wages payable 47,720 72,640 Interest payable 27,160 25,500 198,870 213,360 Bonds payable 70,040 100,090 Total liabilities 268,910 313,450 Common stock, $10 par 370,570 280,710 Retained earnings 145,858 119,610 Total current liabilities Longterm debt Stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity 516,428 400,320 $785,338 $713,770 CHAPMAN COMPANY INCOME STATEMENT FOR THE YEAR ENDED MAY 31, 2014 Sales revenue $1,255,540 Cost of goods sold 722,970 Gross profit 532,570 Expenses Salaries and wages expense 252,910 Interest expense 75,310 Depreciation expense 24,610 Other expenses 8,580 Total expenses 361,410 Operating income 171,160 Income tax expense 43,340 Net income $127,820 The following is additional information concerning Chapman's transactions during the year ended May 31, 2014. 1. 2. 3. 4. 5. 6. 7. All sales during the year were made on account. All merchandise was purchased on account, comprising the total accounts payable account. Plant assets costing $98,600 were purchased by paying $24,600 in cash and issuing 7,400 shares of stock. The \"other expenses\" are related to prepaid items. All income taxes incurred during the year were paid during the year. In order to supplement its cash, Chapman issued 1,586 shares of common stock at par value. Cash dividends of $101,572 were declared and paid at the end of the fiscal year. Your answer is incorrect. Try again. Prepare a statement of cash flows for Chapman Company for the year ended May 31, 2014, using method. (A reconciliation of net income to net cash provided is not required.) cash flow with either a sign e.g. 15,000 or in parenthesis e.g. (15,000).) CHAPMAN COMPANY Statement of Cash Flows (Partial) For the Year Ended May 31, 2014 Cash payments: SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT Your answer is incorrect. Try again. Using the indirect method, calculate only the net cash flow from operating act the year ended May 31, 2014. CHAPMAN COMPANY Statement of Cash Flows (Partial) For the Year Ended May 31, 2014 Adjustments to reconcile net income to Click if you would like to Open Show Work Show Work for this