Question
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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started