Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Use thd following finanacial statements and additional information to (1) prepare a statement of cash flows for the year ended Dec 31,2011 using the indirect

Use thd following finanacial statements and additional information to (1) prepare a statement of cash flows for the year ended Dec 31,2011 using the indirect method, and (2) compute the company's cahs flow on total assets ratio for 2011.

Wescott Company Balance Sheets At Dec 31

Assets: 2011 2010

cash.................................................... $ 85,600 $ 65,200

accounts receivable, net........................ 72,850 56,750

merchandise inventory........................... 157,750 144,850

prepaid expenses ................................ 6,080 12,680

equipment........................................... 280,600 245,000

accumulated depreciation-equipment..... (80,600) (97,600)

total assets......................................... $522,280 $427,480

Liabilities:

Accounts payable............................... $ 52,850 $ 45,450

Income taxes payable......................... 15,240 12,240

Ntoe payable (long term)..................... 59,200 79,200

Total liabilities.................................... $127,290 $136,890

Equity:

Common stock.................................. $ 200,000 $150,000

Contributed capital in excess of par..... 53,000 40,000

Retained earnings.............................. 141,990 100,590

Total equity........................................ $349,990 290,590

Total liabilities and equity................... $522,280 $427,480

Westcott Comapny Income Statement For Year Ended Dec 31 2011

Sales................................................ $488,000

Cost of goods sold............................. $212,540

Depreciation expense......................... 43,000

Other operating expenses................... 106,260

Interest expense................................ 6,400 (368,200)

Other gains (losses):

Gain on sale of equipment................ 4,700

Income before taxes........................... 124,500

Income taxes expense........................ 41,100

Net income........................................ $83,400

Additional Information

a. A $20,000 note payable is retired at its carrying value in exchange for cash.

b. The only changes affecting retained earnings are net income and cash dividends paid.

c. New equipment is acquired for $120,000 cash.

d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700.

e. Prepaid expenses relate to Other Expenses on the income statement.

f. All purchases and sales of merchandise inventory are on credit.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Auditing Real Issues And Cases

Authors: Michael C. Knapp, Loreen Knapp

5th Edition

032418834X, 978-0324188349

More Books

Students also viewed these Accounting questions

Question

How does Disney try to redress prejudice and discrimination?

Answered: 1 week ago