Question
The balance sheet and income statement for Hours Gone Inc. are presented below. Prepare the cash flow statements under both the indirect and direct methods
- The balance sheet and income statement for Hours Gone Inc. are presented below. Prepare the cash flow statements under both the indirect and direct methods for 2019.
Hours Gone Inc. | ||
Balance sheet | ||
2019 | 2018 | |
Cash | 7,500,000 | 6,300,000 |
Accounts receivable | 4,560,000 | 4,400,000 |
allowance for doubtful accounts | (135,000) | (125,000) |
Inventory | 2,400,000 | 2,375,000 |
Supplies | 48,000 | 52,000 |
Prepaid insurance | 45,000 | 65,000 |
Investments, fair value method | 1,200,000 | 1,100,000 |
Investments, equity method | 2,400,000 | 2,200,000 |
Property, plant & equipment | 5,150,000 | 4,150,000 |
Accumulated depreciation | (510,000) | (450,000) |
Total Assets | 22,658,000 | 20,067,000 |
Accounts payable | 3,750,000 | 3,522,000 |
Accrued liabilities | 125,000 | 145,000 |
Income tax payable | 150,000 | 50,000 |
Notes payable, long-term | 1,450,000 | 1,250,000 |
Bonds payable | 4,500,000 | 5,000,000 |
Common stock | 500,000 | 400,000 |
Additional paid in capital | 4,500,000 | 3,600,000 |
Additional paid in capital - stock options | 150,000 | 100,000 |
Retained Earnings | 7,533,000 | 6,000,000 |
Total liabilities and stockholders' equity | 22,658,000 | 20,067,000 |
Hours Gone Inc. | ||
Income statement | ||
Sales revenue | 22,520,000 | |
Cost of goods sold | 12,500,000 | |
Gross profit | 10,020,000 | |
S&A expenses | 6,000,000 | |
Pre-tax operating income | 4,020,000 | |
Investment gains, unrealized | 200,000 | |
Investment income, equity method | 300,000 | |
Other income and gains | 500,000 | |
Loss on sale of equipment | (45,000) | |
Total other expenses and losses | (45,000) | |
Pre-tax income | 4,475,000 | |
Income tax | 895,000 | |
Net income | 3,580,000 | |
Other information: | ||
Hours Gone paid dividends during the year | ||
Hours Gone sold equipment with an original cost of $100,000 and accumulated depreciation of $50,000 for $5,000 | ||
Hours Gone issued $1,000,000 in common stock for equipment | ||
The company also purchased equipment for cash. | ||
The company had stock option expense of $50,000 during the year |
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