Statement of Cash Flows

Jacoby Corporation, a merchandiser, recently completed its calendar year 2013 operations. For the year:

All sales are credit sales

All credits to Accounts Receivable reflect cash receipts from customers

All purchases of inventory are on credit

All debits to Accounts Payable reflect cash payments for inventory

Other expenses are paid in advance and are initially debited to Prepaid Expenses.

The companys balance sheets and income statement follow.

Jacoby Corporation

Balance Sheet

December 31, 2012 and 2013

2013 2012

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, 2013

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

Additional Information on Year 2011 Transactions

a. The loss on the cash sale of equipment was $2,100 (details in b).

b. Sold equipment costing $51,000, with accumulated depreciation of $20,850, for $28,050 cash.

c. Purchased equipment costing $113,250 by paying $38,250 cash and signing a long-term note payable for the balance

d. .

e. Borrowed $6,000 cash by signing a short-term note payable.

f. Paid $45,000 cash to reduce the long-term notes payable.

g. Issued 3,000 shares of common stock for $11 cash per share.

h. Declared and paid cash dividends of $63,000.

Book: Managerial Accounting 4th edition by Braun