Question
Sheffield Corp. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have
Sheffield Corp. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Sheffield Corp. for 2022 and 2021 are provided below.
BALANCE SHEETS
12/31/22
12/31/21
Cash $410000
$ 191000
Accounts receivable 361000 218000
Inventory
386000 482000
Property, plant and equipment $606000 $958000
Less accumulated depreciation (319000 ) 287000 (304000 ) 654000
$1444000
$1545000
.
Accounts payable $ 176000
$ 97000
Income taxes payable 350000 393000
Bonds payable 359000 600000
Common stock 208750 216000
Retained earnings 350250
239000
$1444000
$1545000
INCOME STATEMENT
For the Year Ended December 31, 2022
Sales revenue
$8420000
Cost of sales 7150000
Gross profit 1270000
Selling expenses $601000
Administrative expenses 192000 793000
Income from operations 477000
Interest expense 70000
Income before taxes 407000
Income taxes 101750
Net income
$ 305250
The following additional data were provided:
1. Dividends for the year 2022 were $194000.
2. During the year, equipment was sold for $242000. This equipment cost $353000 originally and had a book value of $287000 at the time of sale. The loss on sale was incorrectly charged to cost of sales.
3. All depreciation expense is in the selling expense category.
Under the direct method, the total taxes paid is
$53000.
$101750.
$144750.
$43000.
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