Question
Statement of Cash Flows Jacoby Corporation, a merchandiser, recently completed its calendar year 2016 operations. For the year: All sales are credit sales All credits
Statement of Cash Flows
Jacoby Corporation, a merchandiser, recently completed its calendar year 2016 operations. For the year:
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All sales are credit sales
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All credits to Accounts Receivable reflect cash receipts from customers
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All purchases of inventory are on credit
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All debits to Accounts Payable reflect cash payments for inventory
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Other expenses are paid in advance and are initially debited to Prepaid Expenses.
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The companys balance sheets and income statement follow.
Jacoby Corporation Balance Sheet December 31, 2015 and 2016
ACG2071 - 2185
2016 | 2015 | |
Assets | ||
Cash | $136,500 | $71,550 |
Accounts receivable | 74,100 | 90,750 |
Merchandise inventory | 454,500 | 490,200 |
Prepaid expenses | 17,100 | 19,200 |
Equipment | 278,250 | 216,000 |
Accumulated depreciation | (108,750) | (93,000) |
Total Assets | $851,700 | $794,700 |
Liabilities | ||
Accounts payable | $117,450 | $123,450 |
Short-term notes payable | 17,250 | 11,250 |
Long-term notes payable | 112,500 | 82,500 |
Common stock, $5 par | 465,000 | 450,000 |
Paid in capital in excess | 18,000 | 0 |
Retained earnings | 121,500 | 127,500 |
TOTAL Liabilities | $851,700 | $794,700 |
Jacoby Corporation Income Statement December 31, 2016
Sales | $1,083,000 | |
Cost of goods sold | 585,000 | |
Gross profit | 498,000 | |
Operating Expenses | ||
Depreciation expense | $36,600 | |
Other expenses | 392,850 | |
Total operating expenses | 429,450 | |
68,550 | ||
Gain and losses | ||
Loss on sale of equipment | 2,100 | |
Income before taxes | 66,450 | |
Income tax expense | 9,450 | |
Net income | $57,000 |
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Additional Information on Year 2011 Transactions
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Thelossonthecashsaleofequipmentwas$2,100(detailsinb).
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Sold equipment costing $51,000, with accumulated depreciation of $20,850, for $28,050 cash.
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Purchased equipment costing $113,250 by paying $38,250 cash and signing a long-term note
payable for the balance
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Borrowed $6,000 cash by signing a short-term note payable.
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Paid$45,000cashtoreducethelong-termnotespayable.
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Issued 3,000 shares of common stock for $11 cash per share.
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Declaredandpaidcashdividendsof$63,000.
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