SA-STATEMENT OF CASH FLOWS The condensed financial data of Vaughan Company are shown below Vaughan Company Comparative Balance Sheets December 31 Assets 2019 2018 Cash $68,000 $83,000 Accounts Receivable 125,000 64,000 Inventory 65,000 35,000 Prepaid Expenses 7,640 10,500 Equipment 155,000 105,000 Accum. Depr. - Equipment (49,500 (40,000) Total Assets $371,140 $257,500 Liabilities and Stockholders' Equity Accounts Payable Accrued Expenses Payable Notes Payable Bonds Payable Carrying Value) Common Stock Retained Earnings Total Liabilities and Stockholders' Equity $31,000 $193,000 24,000 20,000 335,746 0 117,500 50.000 50.000 (69.606) (123.000) $371,140 $257.500 Vaughan Company Income Statement For the Year Ended December 31, 2019 Sales Revenue $ 297,500 Cost of Goods Sold (122,447) Gross Profit 175,053 Operating Expense Depreciation 49,700 Other Operating Expenses 14,670 Operating Income 110,683 Other Income and Gains Gain on Disposal of Equipment 8,750 Other Expense and Losses Interest Expense (30,939) Loss on Bond Redemption (15,100) Net Income $ 73,394 Additional Information The bond redemption occurred on January 1, 2019, right after the annual interest payment. The bonds redeemed were part of a $130,000, 15% bond issue. On March 31, 2019, Vaughan Company issued a $350,000, 12%, 10-year note. The loan documents call for recurring monthly payments of $5,021.48 on the last day of the month. During the year, Vaughan Company paid cash for equipment costing $97,000. Instructions 1. Prepare the statement of cash flows in proper form using the indirect method. 2. Comment on your findings and on the usefulness of the statement of cash flows. What does the statement help users assess? 3. Write the journal entry for the bond redemption. 4. Prepare the amortization schedule for the note payable (first nine months). SA-STATEMENT OF CASH FLOWS The condensed financial data of Vaughan Company are shown below Vaughan Company Comparative Balance Sheets December 31 Assets 2019 2018 Cash $68,000 $83,000 Accounts Receivable 125,000 64,000 Inventory 65,000 35,000 Prepaid Expenses 7,640 10,500 Equipment 155,000 105,000 Accum. Depr. - Equipment (49,500 (40,000) Total Assets $371,140 $257,500 Liabilities and Stockholders' Equity Accounts Payable Accrued Expenses Payable Notes Payable Bonds Payable Carrying Value) Common Stock Retained Earnings Total Liabilities and Stockholders' Equity $31,000 $193,000 24,000 20,000 335,746 0 117,500 50.000 50.000 (69.606) (123.000) $371,140 $257.500 Vaughan Company Income Statement For the Year Ended December 31, 2019 Sales Revenue $ 297,500 Cost of Goods Sold (122,447) Gross Profit 175,053 Operating Expense Depreciation 49,700 Other Operating Expenses 14,670 Operating Income 110,683 Other Income and Gains Gain on Disposal of Equipment 8,750 Other Expense and Losses Interest Expense (30,939) Loss on Bond Redemption (15,100) Net Income $ 73,394 Additional Information The bond redemption occurred on January 1, 2019, right after the annual interest payment. The bonds redeemed were part of a $130,000, 15% bond issue. On March 31, 2019, Vaughan Company issued a $350,000, 12%, 10-year note. The loan documents call for recurring monthly payments of $5,021.48 on the last day of the month. During the year, Vaughan Company paid cash for equipment costing $97,000. Instructions 1. Prepare the statement of cash flows in proper form using the indirect method. 2. Comment on your findings and on the usefulness of the statement of cash flows. What does the statement help users assess? 3. Write the journal entry for the bond redemption. 4. Prepare the amortization schedule for the note payable (first nine months)
