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The income statement and unclassified statement of financial position for Blossom, Inc. follow: BLOSSOM, INC. Statement of Financial Position December 31 Assets 2018 2017 Cash
The income statement and unclassified statement of financial position for Blossom, Inc. follow:
BLOSSOM, INC. Statement of Financial Position December 31 | |||||||
Assets | 2018 | 2017 | |||||
Cash | $97,000 | $47,000 | |||||
Held for trading investments | 120,000 | 112,000 | |||||
Accounts receivable | 70,000 | 40,000 | |||||
Inventory | 122,000 | 92,800 | |||||
Prepaid expenses | 18,000 | 26,000 | |||||
Property, plant, and equipment | 265,000 | 240,000 | |||||
Accumulated depreciation | (45,000 | ) | (52,000 | ) | |||
Total assets | $647,000 | $505,800 | |||||
Liabilities and Shareholders Equity | |||||||
Accounts payable | $90,000 | $70,000 | |||||
Accrued liabilities | 10,000 | 7,000 | |||||
Bank loan payable | 107,000 | 173,800 | |||||
Common shares | 200,000 | 150,000 | |||||
Retained earnings | 240,000 | 105,000 | |||||
Total liabilities and shareholders equity | $647,000 | $505,800 |
BLOSSOM, INC. Income Statement Year Ended December 31, 2018 | ||||||
Sales | $492,000 | |||||
Cost of goods sold | 185,400 | |||||
Gross profit | 306,600 | |||||
Operating expenses | 116,400 | |||||
Income from operations | 190,200 | |||||
Other revenues and expenses | ||||||
Unrealized gain on held for trading investments | $8,000 | |||||
Interest expense | (4,700 | ) | 3,300 | |||
Income before income tax | 193,500 | |||||
Income tax expense | 40,000 | |||||
Net income | $153,500 |
Additional information:
1. | Prepaid expenses and accrued liabilities relate to operating expenses. | |
2. | An unrealized gain on held for trading investments of $8,000 was recorded. | |
3. | New equipment costing $80,000 was purchased for $20,000 cash and a $60,000 long-term bank loan payable. | |
4. | Old equipment having an original cost of $55,000 was sold for $1,000. | |
5. | Accounts payable relate to merchandise creditors. | |
6. | Some of the bank loan was repaid during the year. | |
7. | A dividend was paid during the year. | |
8. | Operating expenses include $46,000 of depreciation expense and a $1,000 loss on disposal of equipment. |
(a) Prepare the statement of cash flows, using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Note X to the Statement of Cash Flows: During the year, the company purchased equipment costing $ by paying $20,000 cash and issuing a $60,000 bank loan payable.
BLOSSOM, INC. Statement of Cash Flows-Di rect Method $ Cash Payments $ $ $Step by Step Solution
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