Sharpe Company Comparative Balance Sheet Accounts As of December, 31 Debit Balances 2020 2019 Cash $ 70,000 $ 51,000 Accounts Receivable 155,000 130,000 Inventory 75,000 61,000 Debt investments (available-for-sale) 55,000 85,000 Equipment 70,000 48,000 Buildings 145,000 145,000 Land 40,000 25,000 Totals $610,000 $545,000 Credit Balances Allowance for Doubtful Accounts $ 10,000 $ 8,000 Accumulated Depreciation—Equipment 21,000 14,000 Accumulated Depreciation—Buildings 37,000 28,000 Accounts Payable 66,000 60,000 Income Taxes Payable 12,000 10,000 Long-Term Notes Payable 62,000 70,000 Common Stock 310,000 260,000 Retained Earnings 92,000 95,000 Totals $610,000 $545,000 Additional data: 1.Equipment that cost $10,000 and was 60% depreciated was sold in 2020. 2.Cash dividends were declared and paid during the year. 3.Common stock was issued in exchange for land. 4.Debt investments that cost $35,000 were sold during the year. 5.There were no write-offs of uncollectible accounts during the year. Sharpe's 2020 income statement is as follows. Sales revenue $950,000 Less: Cost of goods sold 600,000 Gross profit 350,000 Less: Operating expenses (includes depreciation expense and bad debt expense) 250,000 Income from operations 100,000 Other revenues and expenses Gain on sale of investments $15,000 Loss on sale of equipment (3,000) 12,000 Income before taxes 112,000 Income taxes 45,000 Net income $ 67,000 Instructions 1. Compute net cash provided by operating activities under the direct method. 2. Prepare a statement of cash flows using the indirect method.
Comparative
|
Sharpe Company Comparative Balance Sheet Accounts As of December, 31 |
||
|
Debit Balances |
2020 |
2019 |
|
Cash |
$ 70,000 |
$ 51,000 |
|
|
155,000 |
130,000 |
|
Inventory |
75,000 |
61,000 |
|
Debt investments (available-for-sale) |
55,000 |
85,000 |
|
Equipment |
70,000 |
48,000 |
|
Buildings |
145,000 |
145,000 |
|
Land |
40,000 |
25,000 |
|
Totals |
$610,000 |
$545,000 |
|
Credit Balances |
|
|
|
Allowance for Doubtful Accounts |
$ 10,000 |
$ 8,000 |
|
|
21,000 |
14,000 |
|
Accumulated Depreciation—Buildings |
37,000 |
28,000 |
|
Accounts Payable |
66,000 |
60,000 |
|
Income Taxes Payable |
12,000 |
10,000 |
|
Long-Term Notes Payable |
62,000 |
70,000 |
|
Common Stock |
310,000 |
260,000 |
|
|
92,000 |
95,000 |
|
Totals |
$610,000 |
$545,000 |
Additional data:
- 1.Equipment that cost $10,000 and was 60% depreciated was sold in 2020.
- 2.Cash dividends were declared and paid during the year.
- 3.Common stock was issued in exchange for land.
- 4.Debt investments that cost $35,000 were sold during the year.
- 5.There were no write-offs of uncollectible accounts during the year.
Sharpe's 2020 income statement is as follows.
|
Sales revenue |
|
$950,000 |
|
Less: Cost of goods sold |
|
600,000 |
|
Gross profit |
|
350,000 |
|
Less: Operating expenses (includes depreciation expense and |
250,000 |
|
|
Income from operations |
|
100,000 |
|
Other revenues and expenses |
|
|
|
Gain on sale of investments |
$15,000 |
|
|
Loss on sale of equipment |
(3,000) |
12,000 |
|
Income before taxes |
|
112,000 |
|
Income taxes |
|
45,000 |
|
Net income |
|
$ 67,000 |
Instructions
1.
Compute net cash provided by operating activities under the direct method.
2.
Prepare a statement of
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