Question
The financial statements of JamesWorth. appear below: JamesWorth INC. Comparative Balance Sheet December 31 2021 2020 Assets Cash 35,000 20,000 Accounts receivable 112,000 103,000 Inventory
The financial statements of JamesWorth. appear below:
JamesWorth INC. Comparative Balance Sheet December 31
| 2021 | 2020 |
Assets |
|
|
Cash | 35,000 | 20,000 |
Accounts receivable | 112,000 | 103,000 |
Inventory | 425,000 | 460,000 |
Property, plant and equipment | 750,000 | 800,000 |
Accumulated depreciation | - 375,000 | - 330,000 |
Total assets | 947,000 | 1,053,000 |
|
|
|
Liabilities & Shareholders' Equity |
|
|
Accounts payable | 42,000 | 68,000 |
Income taxes payable | 18,000 | 13,000 |
Bonds payable | 825,000 | 860,000 |
Common shares, 10,000 shares issued | 55,000 | 42,000 |
Retained earnings | 7,000 | 70,000 |
Total liabilities and shareholders equity | 947,000 | 1,053,000 |
JamesWorth INC. Income Statement Year Ended December 31, 2021
Sales | $932,000 |
Cost of goods sold | 608,000 |
Gross profit | 324,000 |
Operating expenses | 294,000 |
Profit from operations | 30,000 |
Interest expense | 12,000 |
Loss on sale of equipment | 15,000 |
Profit before income taxes | 3,000 |
Income tax expense | 5,000 |
Net loss | -$2,000 |
The following additional data were provided:
1. During the year, equipment was sold. This equipment cost $75,000 originally and had a carrying amount of $32,000 at the time of sale.
2. During the year, replacement equipment was purchased for $25,000 cash.
3. All depreciation expense is in the operating expenses category.
4. All sales and purchases are on account.
5. Accounts payable pertain to merchandise suppliers.
6. All operating expenses except for depreciation were paid in cash.
Instructions
a) Prepare a cash flow statement for JamesWorth Inc., using the direct method or indirect method.
******SHOW WORKING*****
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