Question
The following is a condensed trial balance of Bravo Co., a publicly held company, after adjustments for income tax expense. Bravo Co. Condensed Trial Balance
The following is a condensed trial balance of Bravo Co., a publicly held company, after adjustments for income tax expense.
Bravo Co.
Condensed Trial Balance
Accounts 12/31/2015 Balances Dr. (Cr.) 12/31/2014 Balances Dr. (Cr.)
Cash $484,000 $817,000
Accounts receivable, net 670,000 610,000
Property, plant, and equipment 1,070,000 995,000
Accumulated depreciation (345,000) (280,000)
Dividends payable (25,000) (10,000)
Income taxes payable (60,000) (150,000)
Deferred income tax liability (63,000) (42,000)
Bonds payable (500,000) (1,000,000)
Unamortized premium on bonds (71,000) (150,000)
Common stock (350,000) (150,000)
Additional paid-in capital (430,000) (375,000)
Retained earnings (185,000) (265,000)
Sales (2,420,000)
Cost of sales 1,863,000
Selling and administrative expenses 220,000
Interest income (14,000)
Interest expense 46,000
Depreciation 88,000
Loss on sale of equipment 7,000
Gain on extinguishment of bonds (90,000)
Income tax expense 105,000 _________
Totals $0 $0
Additional information: > During 2015 equipment with an original cost of $50,000 was sold for cash, and equipment costing $125,000 was purchased. > On January 1, 2015, bonds with a par value of $500,000 and related premium of $75,000 were redeemed. The $1,000 face value, 10% par bonds had been issued on January 1, 2006 to yield 8%. Interest is payable annually every December 31 through 2025. > Bravo's tax payments during 2015 were debited to Income Taxes Payable. Bravo recorded a deferred income tax liability of $42,000 based on temporary differences of $120,000 and an enacted tax rate of 35% at December 31, 2014; prior to 2014 there were no temporary differences. Bravo's 2015 financial statement income before income taxes was greater than its 2015 taxable income, due entirely to temporary differences, by $60,000. Bravo's cumulative net taxable temporary differences at December 31, 2015, were $180,000. Bravo's enacted tax rate for the current and future years is 35%. > 60,000 shares of common stock, $2.50 par, were outstanding on December 31, 2014. > Bravo issued an additional 80,000 shares on April 1, 2015. > There were no changes to retained earnings other than dividends declared. Prepare a statement of cash flows using the indirect method.
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