Question 3 Altar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following information for the year 2014. Comparative Balance Sheet Cash 2014 $ 21,000 2013 $ 18,000 Increase/decrease $ 3,000 Accounts receivable 31,000 35,000 (4,000) Inventory 53,000 25,000 28,000 PP&E, net 120,000 90,000 30,000 Total assets $225,000 $168,000 $57,000 Accounts payable $ 4,000 $ 6,000 $(2,000) Accrued liabilities 2,000 1,000 1,000 Long-term notes payable 84,000 90,000 (6,000) Total liabilities $ 90,000 $ 97,000 $(7,000) Common stock Retained earnings 30,000 2,000 28,000 113,000 74,000 39,000 Treasury stock (8,000) (5,000) (3,000) Total equity $135,000 $ 71,000 $64,000 Total liabilities and equity $225,000 $168,000 $57,000 Income Statement Sales revenue $240,000 Interest revenue 1,000 Gain on sale of plant assets 4,000 Total revenues and gains $245,000 Cost of goods sold 110,000 Salary expense 45,000 Depreciation expense 12,000 Other operating expenses 23,000 Interest expense 1,000 Income tax expense 5,000 Total expenses Net income (loss) $196,000 $49,000 Statement of Retained Earnings Retained earnings, January 1, 2013 $ 74,000 Net income Dividends Retained earnings, December 31, 2013 Additional information provided: 49,000 (10,000) $113,000 Equipment costing $52,000 was purchased for cash. Equipment with a net asset value of $10,000 was sold for $14,000 Depreciation expense of $12,000 was recorded during the year. During 2014, the company repaid $40,000 of long-term notes payable. 2014, the company borrowed $34,000 on a new note payable During -2-
Question 3 Altar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following information for the year 2014. Comparative Balance Sheet Cash 2014 $ 21,000 2013 $ 18,000 Increase/decrease $ 3,000 Accounts receivable 31,000 35,000 (4,000) Inventory 53,000 25,000 28,000 PP&E, net 120,000 90,000 30,000 Total assets $225,000 $168,000 $57,000 Accounts payable $ 4,000 $ 6,000 $(2,000) Accrued liabilities 2,000 1,000 1,000 Long-term notes payable 84,000 90,000 (6,000) Total liabilities $ 90,000 $ 97,000 $(7,000) Common stock Retained earnings 30,000 2,000 28,000 113,000 74,000 39,000 Treasury stock (8,000) (5,000) (3,000) Total equity $135,000 $ 71,000 $64,000 Total liabilities and equity $225,000 $168,000 $57,000 Income Statement Sales revenue $240,000 Interest revenue 1,000 Gain on sale of plant assets 4,000 Total revenues and gains $245,000 Cost of goods sold 110,000 Salary expense 45,000 Depreciation expense 12,000 Other operating expenses 23,000 Interest expense 1,000 Income tax expense 5,000 Total expenses Net income (loss) $196,000 $49,000 Statement of Retained Earnings Retained earnings, January 1, 2013 $ 74,000 Net income Dividends Retained earnings, December 31, 2013 Additional information provided: 49,000 (10,000) $113,000 Equipment costing $52,000 was purchased for cash. Equipment with a net asset value of $10,000 was sold for $14,000 Depreciation expense of $12,000 was recorded during the year. During 2014, the company repaid $40,000 of long-term notes payable. 2014, the company borrowed $34,000 on a new note payable During -2-
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter12: The Statement Of Cash Flows
Section: Chapter Questions
Problem 12.8E
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Transcribed Image Text:Question 3
Altar Company uses the indirect method to prepare its statement of cash flows. Please refer to the
following information for the year 2014.
Comparative Balance Sheet
Cash
2014
$ 21,000
2013
$ 18,000
Increase/decrease
$ 3,000
Accounts receivable
31,000
35,000
(4,000)
Inventory
53,000
25,000
28,000
PP&E, net
120,000
90,000
30,000
Total assets
$225,000
$168,000
$57,000
Accounts payable
$ 4,000
$ 6,000
$(2,000)
Accrued liabilities
2,000
1,000
1,000
Long-term notes payable
84,000
90,000
(6,000)
Total liabilities
$ 90,000
$ 97,000
$(7,000)
Common stock
Retained earnings
30,000
2,000
28,000
113,000
74,000
39,000
Treasury stock
(8,000)
(5,000)
(3,000)
Total equity
$135,000
$ 71,000
$64,000
Total liabilities and equity
$225,000
$168,000
$57,000
Income Statement
Sales revenue
$240,000
Interest revenue
1,000
Gain on sale of plant assets
4,000
Total revenues and gains
$245,000
Cost of goods sold
110,000
Salary expense
45,000
Depreciation expense
12,000
Other operating expenses
23,000
Interest expense
1,000
Income tax expense
5,000
Total expenses
Net income (loss)
$196,000
$49,000
Statement of Retained Earnings
Retained earnings, January 1, 2013
$ 74,000
Net income
Dividends
Retained earnings, December 31, 2013
Additional information provided:
49,000
(10,000)
$113,000
Equipment costing $52,000 was purchased for cash.
Equipment with a net asset value of $10,000 was sold for $14,000
Depreciation expense of $12,000 was recorded during the year.
During 2014, the company repaid $40,000 of long-term notes payable.
2014, the company borrowed $34,000 on a new note payable
During
-2-
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