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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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
|
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
|
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
|
|
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
|
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
|
|
|
|
|
|
|
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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