Use the following financial statements and additional information.

Additional Information

1. A $33,000 note payable is retired at its $33,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $59,000 cash.
4. Received cash for the sale of equipment that had cost $50,000, yielding a $2,100 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

Using the income statement, the comparative balance sheet, and the additional information given above, reconstruct the entries for the summarized activity of the current fiscal year. Upon completion, the trial balance tab should agree with the June 30, 2017 balances.

1. Reconstruct the journal entry for cash receipts from customers, incorporating the change in the related balance sheet account(s), if any.

2. Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any.

3. Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any.

4. Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any.

5. Reconstruct the journal entry for the sale of equipment at a gain, incorporating the change in the related balance sheet account(s), if any.

6. Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any.

7. Reconstruct the entry to record the retirement of the $33,000 note payable at its $33,000 carrying (book) value in exchange for cash.

8. Reconstruct the entry for the purchase of new equipment.

9. Reconstruct the entry for the issuance of common stock.

10. Close all revenue and gain accounts to income summary.

11. Close all expense accounts to income summary.

12. Close Income Summary to Retained Earnings.

13. Reconstruct the journal entry for cash dividends paid.

Prepare the Statement of Cash flows for the year ended June 30, 2017 using the Direct Method. Hint Use the Cash T-account on the General Ledger tab to identify the sources and uses of cash. List cash outflows as negative values.

Prepare the operating activities section of the statement of cash flows using the indirect method. Enter reductions to net cash provided by operating activities as negative values.

2016 SMITH INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 Assets Cash $116,500 Accounts receivable, net 68,000 Inventory 63,000 Prepaid expenses 4,400 Total current assets 251,900 Equipment 127,000 Accum. depreciation-Equipment (33,000) Total assets $345,900 Liabilities and Equity Accounts payable $ 26,000 Wages payable 6,000 Income taxes payable 3,600 Total current liabilities 35,600 Notes payable (long term) 33,000 Total liabilities 68,600 Equity Common stock, $5 par value 240,000 Retained earnings 37,300 Total liabilities and equity $345,900 $ 60,500 53,000 88,000 5,500 207,000 118,000 (11,000) $314,000 $ 32,000 16,000 4,000 52,000 65,000 117,000 170,000 27,000 $314,000 SMITH INC. Income Statement For Year Ended June 30, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $60,000 Other expenses 68,000 Total operating expenses $685,000 419,000 266,000 128,000 138,000 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense 2,100 140,100 42,880 $ 97,220 Net income SMITH INC. Statement of Cash Flows (Direct Method) For Year Ended June 30, 2017 Cash flows from operating activities: Cash flows from investing activities: Cash flows from financing activities: SMITH INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2017 Cash flows from operating activities: Adjustments to reconcile net income to net cash provided by operating activities