Financial statements for Peachfield Corporation as well as additional information relevant to cash flows during the period are shown. Peachfield CorporationIncome StatementFor Year Ended December 31, 20-21Net sales $985,000.002Cost of goods sold 515,000.003Gross profit $470,000.004Operating expenses 299,400.005Operating income $170,600.006Other revenues and expenses: 7Gain on sale of office equipment$5,000.00 8Interest revenue2,100.00 9Interest expense(436.00)6,664.0010Income before taxes $177,264.0011Income tax expense 60,500.0012Net income $116,764.00 Peachfield CorporationStatement of Retained EarningsFor Year Ended December 31, 20-21Retained earnings, January 1, 20-2 $141,973.002Net income$116,764.00 3Less dividends20,000.00 4Net increase in retained earnings 96,764.005Retained earnings, December 31, 20-2 $238,737.00 Peachfield CorporationComparative Balance SheetDecember 31, 20-2 and 20-11 2002 2001INCREASE (DECREASE)2Assets 3Current assets: 4Cash$102,072.00 $27,200.00 $74,872.005Government notes3,600.00 12,000.00 (8,400.00)6Accrued interest receivable320.00 250.00 70.007Accounts receivable (net)152,945.00 140,905.00 12,040.008Merchandise inventory355,490.00 295,400.00 60,090.009Supplies and prepayments14,500.00 21,500.00 (7,000.00)10Total current assets $628,927.00 $497,255.00131,672.0011Property, plant, and equipment: 12Store equipment$308,000.00 $232,800.00 75,200.0013Less accumulated depreciation-store equipment108,000.00200,000.0084,000.00148,800.0024,000.0014Delivery equipment$270,000.00 $192,000.00 78,000.0015Less accumulated depreciation-delivery equipment75,000.00195,000.0048,000.00144,000.0027,000.0016Office equipment$148,000.00 $203,940.00 (55,940.00)17Less accumulated depreciation-office equipment38,000.00110,000.0036,600.00167,340.001,400.0018Total property, plant, and equipment 505,000.00 460,140.0044,860.0019Total assets $1,133,927.00 $957,395.00176,532.0020Liabilities 21Current liabilities: 22Notes payable$65,480.00 $54,780.00 10,700.0023Accounts payable53,500.00 125,473.00 (71,973.00)24Income tax payable7,000.00 5,000.00 2,000.0025Accrued and withheld payroll taxes8,760.00 7,644.00 1,116.0026Accrued interest payable450.00 525.00 (75.00)27Total current liabilities $135,190.00 $193,422.00(58,232.00)28Long-term liabilities: 29Notes payable 20,000.00 20,000.0030Total liabilities $155,190.00 $193,422.00(38,232.00)31Stockholders’ Equity 32Common stock ($10 par, 1,000,000 shares authorized; 33Issued: 50,000 in 20-2 and 38,800 in 20-1)$500,000.00 $388,000.00 112,000.0034Paid-in capital in excess of par-common stock240,000.00 234,000.00 6,000.0035Retained earnings238,737.00 141,973.00 96,764.0036Total stockholders’ equity 978,737.00 763,973.00214,764.0037Total liabilities and stockholders’ equity $1,133,927.00 $957,395.00176,532.00 Additional information:1.Office equipment was sold during the year for $75,000. Cost$80,000Accumulated depreciation(10,000)Book value$70,000Market value75,000Gain on sale$5,000 2.Depreciation expense for the year was $62,400 is shown Store equipment$24,000Delivery equipment27,000Office equipment11,400 $62,400 3.No other equipment was sold during the year. The following purchases were made for cash. Store equipment$55,200Delivery equipment78,000Office equipment24,060 $157,260 4.Declared and paid cash dividends of $20,000.5.Issued 11,200 shares of $10 par common stock for $118,000.6.Issued a note payable for $10,700.7.Additional store equipment was acquired by issuing a long-term note payable for $20,000. Required:1.Prepare a statement of cash flows explaining the change in cash and cash equivalents.2.Reconcile cash and cash equivalents at the bottom of the statement of cash flows.

The cash flow statement is prepared at the end of the period to know the cash position. It reflects…

Answered: Financial statements for Peachfield…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Financial statements for Peachfield Corporation as well as additional information relevant to cash flows during the period are shown.

Peachfield Corporation

Income Statement

For Year Ended December 31, 20-2

1	Net sales		$985,000.00
2	Cost of goods sold		515,000.00
3	Gross profit		$470,000.00
4	Operating expenses		299,400.00
5	Operating income		$170,600.00
6	Other revenues and expenses:
7	Gain on sale of office equipment	$5,000.00
8	Interest revenue	2,100.00
9	Interest expense	(436.00)	6,664.00
10	Income before taxes		$177,264.00
11	Income tax expense		60,500.00
12	Net income		$116,764.00

Peachfield Corporation

Statement of Retained Earnings

For Year Ended December 31, 20-2

1	Retained earnings, January 1, 20-2		$141,973.00
2	Net income	$116,764.00
3	Less dividends	20,000.00
4	Net increase in retained earnings		96,764.00
5	Retained earnings, December 31, 20-2		$238,737.00

Peachfield Corporation

Comparative Balance Sheet

December 31, 20-2 and 20-1

1			2002		2001	INCREASE (DECREASE)
2	Assets
3	Current assets:
4	Cash	$102,072.00		$27,200.00		$74,872.00
5	Government notes	3,600.00		12,000.00		(8,400.00)
6	Accrued interest receivable	320.00		250.00		70.00
7	Accounts receivable (net)	152,945.00		140,905.00		12,040.00
8	Merchandise inventory	355,490.00		295,400.00		60,090.00
9	Supplies and prepayments	14,500.00		21,500.00		(7,000.00)
10	Total current assets		$628,927.00		$497,255.00	131,672.00
11	Property, plant, and equipment:
12	Store equipment	$308,000.00		$232,800.00		75,200.00
13	Less accumulated depreciation-store equipment	108,000.00	200,000.00	84,000.00	148,800.00	24,000.00
14	Delivery equipment	$270,000.00		$192,000.00		78,000.00
15	Less accumulated depreciation-delivery equipment	75,000.00	195,000.00	48,000.00	144,000.00	27,000.00
16	Office equipment	$148,000.00		$203,940.00		(55,940.00)
17	Less accumulated depreciation-office equipment	38,000.00	110,000.00	36,600.00	167,340.00	1,400.00
18	Total property, plant, and equipment		505,000.00		460,140.00	44,860.00
19	Total assets		$1,133,927.00		$957,395.00	176,532.00
20	Liabilities
21	Current liabilities:
22	Notes payable	$65,480.00		$54,780.00		10,700.00
23	Accounts payable	53,500.00		125,473.00		(71,973.00)
24	Income tax payable	7,000.00		5,000.00		2,000.00
25	Accrued and withheld payroll taxes	8,760.00		7,644.00		1,116.00
26	Accrued interest payable	450.00		525.00		(75.00)
27	Total current liabilities		$135,190.00		$193,422.00	(58,232.00)
28	Long-term liabilities:
29	Notes payable		20,000.00			20,000.00
30	Total liabilities		$155,190.00		$193,422.00	(38,232.00)
31	Stockholders’ Equity
32	Common stock ($10 par, 1,000,000 shares authorized;
33	Issued: 50,000 in 20-2 and 38,800 in 20-1)	$500,000.00		$388,000.00		112,000.00
34	Paid-in capital in excess of par-common stock	240,000.00		234,000.00		6,000.00
35	Retained earnings	238,737.00		141,973.00		96,764.00
36	Total stockholders’ equity		978,737.00		763,973.00	214,764.00
37	Total liabilities and stockholders’ equity		$1,133,927.00		$957,395.00	176,532.00

Additional information:

1.	Office equipment was sold during the year for $75,000.


Cost	$80,000
Accumulated depreciation	(10,000)
Book value	$70,000
Market value	75,000
Gain on sale	$5,000

2.	Depreciation expense for the year was $62,400 is shown


Store equipment	$24,000
Delivery equipment	27,000
Office equipment	11,400
	$62,400

3.	No other equipment was sold during the year. The following purchases were made for cash.


Store equipment	$55,200
Delivery equipment	78,000
Office equipment	24,060
	$157,260

4.	Declared and paid cash dividends of $20,000.
5.	Issued 11,200 shares of $10 par common stock for $118,000.
6.	Issued a note payable for $10,700.
7.	Additional store equipment was acquired by issuing a long-term note payable for $20,000.

Required:

1.	Prepare a statement of cash flows explaining the change in cash and cash equivalents.
2.	Reconcile cash and cash equivalents at the bottom of the statement of cash flows.

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