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The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The
The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized.
Current Year | Prior Year | ||||||||
Balance Sheet | |||||||||
Assets | |||||||||
Cash | $ | 83,100 | $ | 103,200 | |||||
Accounts receivable | 112,000 | 98,000 | |||||||
Merchandise inventory | 84,000 | 91,000 | |||||||
Property and equipment | 158,000 | 84,000 | |||||||
Less: Accumulated depreciation | (45,120 | ) | (23,000 | ) | |||||
Total assets | $ | 391,980 | $ | 353,200 | |||||
Liabilities: | |||||||||
Accounts payable | $ | 14,000 | $ | 16,800 | |||||
Salaries and Wages Payable | 2,800 | 1,400 | |||||||
Notes payable, long-term | 70,000 | 84,000 | |||||||
Stockholders Equity: | |||||||||
Common stock | 132,000 | 112,000 | |||||||
Retained earnings | 173,180 | 139,000 | |||||||
Total liabilities and stockholders equity | $ | 391,980 | $ | 353,200 | |||||
Income Statement | |||||||||
Sales | $ | 360,000 | |||||||
Cost of goods sold | 190,000 | ||||||||
Depreciation expense | 22,120 | ||||||||
Other expenses | 90,000 | ||||||||
Net income | $ | 57,880 | |||||||
Other information from the companys records includes the following:
- Bought equipment for cash, $74,000.
- Paid $14,000 on long-term note payable.
- Issued new shares of common stock for $20,000 cash.
- Cash dividends of $23,700 were declared and paid to stockholders.
- Accounts Payable arose from inventory purchases on credit.
- Income tax expense ($14,470) and interest expense ($4,200) were paid in full at the end of both years and are included in Other Expenses.
Required:
- Prepare the statement of cash flows using the indirect method. Include any supplemental disclosures. (Enter any deductions and cash outflows as a negative value.)
WICKERSHAM BROTHERS Inc. Statement of Cash Flows For the Year Ended December 31 Cash Flows from Operating Activities: Net income 57,880 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Expense 22,120 Changes in current assets and current liabilites: Accounts Receivable 14,000 Inventories 7,000 Accounts Payable Salaries and Wages Payable $ 101,000 Net Cash Provided by Operating Activities Cash Flows from Investing Activities: Additions to Property, Plant, and Equipment $ (74,000): $ (74,000) Net Cash Used in Investing Activities Cash Flows from Financing Activities: Payments on long-term debt Proceeds from issuance of Stock Payment of cash dividends 69 0 Net Cash Used in Financing Activities Net Decrease in Cash and Cash Equivalents Cash and Cash Equivalents, beginning of period Cash and Cash Equivalents, end of period Supplemental Disclosures: Cash paid for interest Cash paid for income tax $
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