Required information [The following information applies to the questions displayed below.] Purple Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory. PURPLE COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 145,400 33,750 Depreciation expense other gains (losses). Loss on sale of equipment Income before taxes Income taxes expense Net Income Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets PURPLE COMPANY Comparative Balance Sheets December 31 Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable Total liabilities $ 647,500 298,000 349,500 179,150 (18,125) 152,225 42,450 $ 109,775 Current Year Prior Year $ 69,400 85,400 295, 156 1,340 451,296 144,500 (43,125) $ 552,671 $ 66,141 72,400 138,541 182,250 57,000 174,880 $ 552,671 $86,500 63,625 264,800 2,155 Required: Prepare a complete statement of cash flows using the direct method. Note: Amounts to be deducted should be indicated with a minus sign. 417,080 121,000 (52,500) $ 485,580. Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity Additional Information on Current Year Transactions a. Sold equipment for cash. b. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note for the balance. c. Paid cash to reduce the long-term note. $ 134,175 70,350 204,525 163,250 0 117,805 $ 485,580
Required information [The following information applies to the questions displayed below.] Purple Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory. PURPLE COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 145,400 33,750 Depreciation expense other gains (losses). Loss on sale of equipment Income before taxes Income taxes expense Net Income Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets PURPLE COMPANY Comparative Balance Sheets December 31 Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable Total liabilities $ 647,500 298,000 349,500 179,150 (18,125) 152,225 42,450 $ 109,775 Current Year Prior Year $ 69,400 85,400 295, 156 1,340 451,296 144,500 (43,125) $ 552,671 $ 66,141 72,400 138,541 182,250 57,000 174,880 $ 552,671 $86,500 63,625 264,800 2,155 Required: Prepare a complete statement of cash flows using the direct method. Note: Amounts to be deducted should be indicated with a minus sign. 417,080 121,000 (52,500) $ 485,580. Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity Additional Information on Current Year Transactions a. Sold equipment for cash. b. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note for the balance. c. Paid cash to reduce the long-term note. $ 134,175 70,350 204,525 163,250 0 117,805 $ 485,580
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required information
[The following information applies to the questions displayed below.]
Purple Company's current year income statement, comparative balance sheets, and additional information follow. For the
year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all
purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory.
PURPLE COMPANY
Income Statement
For Current Year Ended December 31
Sales
Cost of goods sold
Gross profit
Operating expenses (excluding depreciation) $ 145,400
33,750
Depreciation expense
Other gains (losses)
Loss on sale of equipment
Income before taxes
Income taxes expense
Net income
Assets
Cash
Accounts receivable
Inventory
Prepaid expenses
Total current assets
PURPLE COMPANY
Comparative Balance Sheets
December 31
Equipment
Accumulated depreciation-Equipment
Total assets
Liabilities and Equity
Accounts payable
Long-term notes payable
Total liabilities
$ 647,500
298,000
349,500
179,150
(18,125)
152,225
42,450
$ 109,775
Current Year Prior Year
$ 86,500
$ 69,400
85,400
295, 156
1,340
63,625
264,800
2,155
451,296
144,500
(43,125)
$ 552,671
$ 66,141
72,400
138,541
182,250
57,000
174,880
$ 552,671
417,080
121,000
(52,500)
$ 485,580.
Equity
Common stock, $5 par value.
Paid-in capital in excess of par, common stock
Retained earnings
Total liabilities and equity
Additional Information on Current Year Transactions
a. Sold equipment for cash.
b. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note for the balance.
c. Paid cash to reduce the long-term note.
Required:
Prepare a complete statement of cash flows using the direct method.
Note: Amounts to be deducted should be indicated with a minus sign.
$ 134,175
70,350
204,525
163,250
117,805
$ 485,580](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff4f4865a-ef7d-48b6-9e5b-0e85084b2d7c%2Fbe44e7bf-3f12-4b8b-b792-9e706eca21cf%2Fhhh3ucs_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Purple Company's current year income statement, comparative balance sheets, and additional information follow. For the
year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all
purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory.
PURPLE COMPANY
Income Statement
For Current Year Ended December 31
Sales
Cost of goods sold
Gross profit
Operating expenses (excluding depreciation) $ 145,400
33,750
Depreciation expense
Other gains (losses)
Loss on sale of equipment
Income before taxes
Income taxes expense
Net income
Assets
Cash
Accounts receivable
Inventory
Prepaid expenses
Total current assets
PURPLE COMPANY
Comparative Balance Sheets
December 31
Equipment
Accumulated depreciation-Equipment
Total assets
Liabilities and Equity
Accounts payable
Long-term notes payable
Total liabilities
$ 647,500
298,000
349,500
179,150
(18,125)
152,225
42,450
$ 109,775
Current Year Prior Year
$ 86,500
$ 69,400
85,400
295, 156
1,340
63,625
264,800
2,155
451,296
144,500
(43,125)
$ 552,671
$ 66,141
72,400
138,541
182,250
57,000
174,880
$ 552,671
417,080
121,000
(52,500)
$ 485,580.
Equity
Common stock, $5 par value.
Paid-in capital in excess of par, common stock
Retained earnings
Total liabilities and equity
Additional Information on Current Year Transactions
a. Sold equipment for cash.
b. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note for the balance.
c. Paid cash to reduce the long-term note.
Required:
Prepare a complete statement of cash flows using the direct method.
Note: Amounts to be deducted should be indicated with a minus sign.
$ 134,175
70,350
204,525
163,250
117,805
$ 485,580
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