Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Statement of Cash Flows (Indirect Method) The Dairy Companys income statement and comparative balance sheets as of December 31 of the current year and the

Statement of Cash Flows (Indirect Method) The Dairy Companys income statement and comparative balance sheets as of December 31 of the current year and the previous year follow:

DAIRY COMPANY Income Statement For the Year Ended December 31
Sales Revenue $700,000
Cost of Goods Sold $460,000
Wages and Other Operating Expenses 95,000
Depreciation Expense 22,000
Goodwill Amortization Expense 7,000
Interest Expense 10,000
Income Tax Expense 36,000
Loss on Bond Retirement 5,000 635,000
Net Income $65,000

DAIRY COMPANY Balance Sheets
Dec. 31, Current Year Dec. 31, Previous Year
Assets
Cash $22,000 $18,000
Accounts Receivable 43,000 28,000
Inventory 103,000 129,000
Prepaid Expenses 12,000 10,000
Plant Assets 360,000 336,000
Accumulated Depreciation (87,000) (84,000)
Goodwill 43,000 50,000
Total Assets $496,000 $487,000
Liabilities and Stockholders Equity
Accounts Payable $32,000 $26,000
Interest Payable 4,000 7,000
Income Tax Payable 6,000 8,000
Bonds Payable 60,000 100,000
Common Stock 252,000 248,000
Retained Earnings 142,000 98,000
Total Liabilities and Stockholders Equity $496,000 $487,000

During the year, the company sold for $17,000 cash old equipment that had cost $36,000 and had $19,000 accumulated depreciation. New equipment worth $60,000 was acquired in exchange for $60,000 of bonds payable. Bonds payable of $100,000 were retired for cash at a loss. A $21,000 cash dividend was declared and paid. All stock issuances were for cash. Required a. Compute the change in cash that occurred in the current year.

b. Prepare a statement of cash flows using the indirect method. a. Change in Cash during the current year $Answer AnswerIncreaseDecrease

b. Use a negative sign with cash outflow answers.

DAIRY COMPANY Statement of Cash Flows For Year Ended December 31
Cash Flow from Operating Activities
Net Income Answer
Add (deduct) items to convert net income to cash basis
Depreciation Answer
Goodwill Amortization Answer
Loss on Bond Retirement Answer
Accounts Receivable AnswerIncreaseDecrease Answer
Inventory AnswerIncreaseDecrease Answer
Prepaid Expenses AnswerIncreaseDecrease Answer
Accounts Payable AnswerIncreaseDecrease Answer
Interest Payable AnswerIncreaseDecrease Answer
Income Tax Payable AnswerIncreaseDecrease Answer
Cash Flow Provided by Operating Activities Answer
Cash Flow from Investing Activities
Sale of Equipment Answer
Cash Flow from Financing Activities
Retirement of Bonds Payable Answer
Issuance of Common Stock Answer
Payment of Dividends Answer
Cash Used by Financing Activities Answer
NetChange in Cash Answer
Cash at Beginning of Year Answer
Cash at End of Year Answer

Please answer all parts of the question.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials of Accounting for Governmental and Not-for-Profit Organizations

Authors: Paul A. Copley

10th Edition

007352705X, 978-0073527055

More Books

Students also viewed these Accounting questions

Question

Explain the importance of setting goals.

Answered: 1 week ago

Question

Does log 81 (2401) = log 3 (7)? Verify the claim algebraically.

Answered: 1 week ago

Question

Briefly describe how checksum works.

Answered: 1 week ago