Question
The balance sheet for December 31, 2012, December 31, 2011, and the income statement for the year ended December 31, 2012, for Rocket Company follows.
The balance sheet for December 31, 2012, December 31, 2011, and the income statement for the year ended December 31, 2012, for Rocket Company follows.
Rocket Company
Balance Sheet
December 31, 2012 and 2011
2012
2011
Assets
Cash
$ 100,000
$ 80,000
Accounts receivable, net
240,000
280,000
Inventory
320,000
400,000
Land
200,000
200,000
Building and equipment
520,000*
460,000
Accumulated depreciation
(340,000)
(280,000)
Total assets
$1.040,000
$1,140,000
Liabilities and Stockholders' Equity
Accounts payable
$ 120,000
$ 140,000
Income taxes payable
16,000
12,000
Wages payable
20,000
12,000
Current notes payable
200,000**
240,000
Common stock
440,000***
400,000
Retained earnings
244,000
336,000
Total liabilities and stockholders' equity
$520,000
$1,140,000
* During 2012 cash payments for building and equipment $60,000.
** During 2012 cash paid for retirement of notes payable $40,000.
*** During 2012 cash received from issuance of stock.
Rocket Company
Income Statement
For the Year Ended December 31, 2012
Sales
$2,000,000
Less expenses:
Cost of goods sold
$1,320,000
Selling and administrative expenses
360,000
(includes depreciation of $60,000)
Interest expense
20,000
Total expenses
1,700,000
Income before taxes
$ 300,000
Income tax expense
120,000
Net income
$ 180,000
Note: Cash dividends of $272,000 were paid during 2012.
Required:
a.
Prepare the statement of cash flows for 2012.
b. calculate 2012 ending cash balance.
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