continue Teal Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Teal as of May 31, 2020, are as follows. The company is preparing its statement of cash flows. TEAL COMPANY COMPARATIVE BALANCE SHEET AS OF MAY 31 2020 2019 Current assets Cash $28,200 $19,800 Accounts receivable 74,700 58,500 Inventory 218,100 250,800 Prepaid expenses 9,000 6,900 Total current assets 330,000 336,000 Plant assets Plant assets 598,100 498,300 Less: Accumulated depreciation—plant assets 149,000 124,700 Net plant assets 449,100 373,600 Total assets $779,100 $709,600 Current liabilities Accounts payable $123,900 $116,100 Salaries and wages payable 46,800 72,200 Interest payable 27,100 25,300 Total current liabilities 197,800 213,600 Long-term debt Bonds payable 70,000 100,000 Total liabilities 267,800 313,600 Stockholders’ equity Common stock, $10 par 370,000 280,000 Retained earnings 141,300 116,000 Total stockholders’ equity 511,300 396,000 Total liabilities and stockholders’ equity $779,100 $709,600 TEAL COMPANY INCOME STATEMENT FOR THE YEAR ENDED MAY 31, 2020 Sales revenue $1,247,300 Cost of goods sold 729,200 Gross profit 518,100 Expenses Salaries and wages expense 251,600 Interest expense 74,500 Depreciation expense 24,300 Other expenses 8,200 Total expenses 358,600 Operating income 159,500 Income tax expense 43,300 Net income $116,200 The following is additional information concerning Teal’s transactions during the year ended May 31, 2020. 1. All sales during the year were made on account. 2. All merchandise was purchased on account, comprising the total accounts payable account. 3. Plant assets costing $99,800 were purchased by paying $28,800 in cash and issuing 7,100 shares of stock. 4. The “other expenses” are related to prepaid items. 5. All income taxes incurred during the year were paid during the year. 6. In order to supplement its cash, Teal issued 1,900 shares of common stock at par value. 7. Cash dividends of $90,900 were declared and paid at the end of the fiscal year. (b)

continue Teal Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Teal as of May 31, 2020, are as follows. The company is preparing its statement of cash flows. TEAL COMPANY COMPARATIVE BALANCE SHEET AS OF MAY 31 2020 2019 Current assets Cash $28,200 $19,800 Accounts receivable 74,700 58,500 Inventory 218,100 250,800 Prepaid expenses 9,000 6,900 Total current assets 330,000 336,000 Plant assets Plant assets 598,100 498,300 Less: Accumulated depreciation—plant assets 149,000 124,700 Net plant assets 449,100 373,600 Total assets $779,100 $709,600 Current liabilities Accounts payable $123,900 $116,100 Salaries and wages payable 46,800 72,200 Interest payable 27,100 25,300 Total current liabilities 197,800 213,600 Long-term debt Bonds payable 70,000 100,000 Total liabilities 267,800 313,600 Stockholders’ equity Common stock, $10 par 370,000 280,000 Retained earnings 141,300 116,000 Total stockholders’ equity 511,300 396,000 Total liabilities and stockholders’ equity $779,100 $709,600 TEAL COMPANY INCOME STATEMENT FOR THE YEAR ENDED MAY 31, 2020 Sales revenue $1,247,300 Cost of goods sold 729,200 Gross profit 518,100 Expenses Salaries and wages expense 251,600 Interest expense 74,500 Depreciation expense 24,300 Other expenses 8,200 Total expenses 358,600 Operating income 159,500 Income tax expense 43,300 Net income $116,200 The following is additional information concerning Teal’s transactions during the year ended May 31, 2020. 1. All sales during the year were made on account. 2. All merchandise was purchased on account, comprising the total accounts payable account. 3. Plant assets costing $99,800 were purchased by paying $28,800 in cash and issuing 7,100 shares of stock. 4. The “other expenses” are related to prepaid items. 5. All income taxes incurred during the year were paid during the year. 6. In order to supplement its cash, Teal issued 1,900 shares of common stock at par value. 7. Cash dividends of $90,900 were declared and paid at the end of the fiscal year. (b)

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Teal Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Teal as of May 31, 2020, are as follows. The company is preparing its statement of cash flows.

TEAL COMPANY COMPARATIVE BALANCE SHEET AS OF MAY 31
	2020	2019
Current assets
Cash	$28,200	$19,800
Accounts receivable	74,700	58,500
Inventory	218,100	250,800
Prepaid expenses	9,000	6,900
Total current assets	330,000	336,000

Plant assets
Plant assets	598,100	498,300
Less: Accumulated depreciation—plant assets	149,000	124,700
Net plant assets	449,100	373,600
Total assets	$779,100	$709,600

Current liabilities
Accounts payable	$123,900	$116,100
Salaries and wages payable	46,800	72,200
Interest payable	27,100	25,300
Total current liabilities	197,800	213,600

Long-term debt
Bonds payable	70,000	100,000
Total liabilities	267,800	313,600

Stockholders’ equity
Common stock, $10 par	370,000	280,000
Retained earnings	141,300	116,000
Total stockholders’ equity	511,300	396,000
Total liabilities and stockholders’ equity	$779,100	$709,600

TEAL COMPANY INCOME STATEMENT FOR THE YEAR ENDED MAY 31, 2020
Sales revenue		$1,247,300
Cost of goods sold		729,200
Gross profit		518,100

Expenses
Salaries and wages expense		251,600
Interest expense		74,500
Depreciation expense		24,300
Other expenses		8,200
Total expenses		358,600
Operating income		159,500
Income tax expense		43,300
Net income		$116,200

The following is additional information concerning Teal’s transactions during the year ended May 31, 2020.

1.		All sales during the year were made on account.
2.		All merchandise was purchased on account, comprising the total accounts payable account.
3.		Plant assets costing $99,800 were purchased by paying $28,800 in cash and issuing 7,100 shares of stock.
4.		The “other expenses” are related to prepaid items.
5.		All income taxes incurred during the year were paid during the year.
6.		In order to supplement its cash, Teal issued 1,900 shares of common stock at par value.
7.		Cash dividends of $90,900 were declared and paid at the end of the fiscal year.

(b)

(c)

Using the indirect method, calculate only the net cash flow from operating activities for Teal Company for the year ended May 31, 2020. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

TEAL COMPANY Statement of Cash Flows (Partial)

		$
Adjustments to reconcile net income to

	$







		$

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