Question
The statement of income and unclassified statement of financial position for Cullumber, Inc. follow: CULLUMBER, INC. Statement of Financial Position December 31 Assets 2021 2020
The statement of income and unclassified statement of financial position for Cullumber, Inc. follow:
CULLUMBER, INC. Statement of Financial Position December 31
Assets 2021 2020
Cash $99,000 $47,400
Trading investments 126,000 113,000
Accounts receivable 70,000 41,100
Inventory 119,800 91,000
Estimated inventory returns 2,800 2,100
Prepaid expenses 18,300 27,400
Equipment 304,500 276,000
Accumulated depreciation (46,000 ) (53,300 )
Total assets $694,400 $544,700
Liabilities and Shareholders Equity
Accounts payable $98,000 $71,900
Property tax payable 10,400 6,800
Refund liability 1,400 800
Bank loan payablecurrent portion 100,000 128,100
Bank loan payablenoncurrent portion 31,600 31,600
Common shares 210,000 180,000
Retained earnings 243,000 125,500
Total liabilities and shareholders equity $694,400 $544,700
CULLUMBER, INC.
Statement of Income
Year Ended December 31, 2021
Sales $536,550
Cost of goods sold 188,700
Gross profit 347,850
Operating expenses 116,420
Income from operations 231,430
Other income and expenses
Unrealized gain on trading investments $13,000
Interest expense (4,780 ) 8,220
Income before income tax 239,650
Income tax expense 40,000
Net income $199,650
Additional information regarding 2021:
1. Prepaid expenses and property tax payable relate to operating expenses.
2. New equipment costing $87,000 was purchased for $20,800 cash and a $66,200 long-term bank loan payable.
3. Old equipment having an original cost of $58,500 was sold for $1,500.
4. Accounts payable relate to inventory suppliers.
5. Some of the bank loan was repaid during the year.
6. A dividend was paid during the year.
7. Operating expenses include $46,600 of depreciation expense and a $3,100 loss on disposal of equipment.
8. Common shares were issued for $42,000 cash during the year and some common shares were bought back and retired at the cost they were originally issued at.
(a) Prepare the statement of cash flows, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
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