The financial statements of Bait and Tackle are presented below. Prepare a statement of cash flows using both the direct and indirect method.
The financial statements of Bait and Tackle are presented below. Prepare a statement of cash flows using both the direct and indirect method.
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter7: Fixed Assets, Natural Resources, And Intangible Assets
Section: Chapter Questions
Problem 7.3.2MBA
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Question
- The financial statements of Bait and Tackle are presented below. Prepare a statement of
cash flows using both the direct and indirect method.
Additional information:
- Operating expenses are composed of:
Depreciation $12,000; Salaries $50,000; Loss on Sale of Equipment $9,000; other operating expenses $64,000. - Other operating expenses are cash expenses.
- Equipment was purchased during the year for $135,000 cash.
- Equipment was sold for cash during the year. The original cost of the equipment was $60,000, and the
accumulated depreciation was $45,000. - Dividends were declared and paid during the year.
![Bait and Tackle
Balance Sheet
As at December 31
2017
2016
$24,000
50,000
88.000
Cash
$39,000
Accounts receivable
64,000
Inventory
Equipment
Accumulated depreciation
Total assets
58,000
325,000
250,000
(92.000)
$394.000
(125,000)
$287,000
Accounts payable
Income taxes payable
Bank loan payable
$32,000
$40,000
10,000
11,000
20,000
Common shares
60,000
50,000
Retained earnings
Total liabilities and shareholders` equity
272.000
$394.000
186.000
$287.000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcf68fe84-9abd-4512-810d-f8430ebdaf65%2Fe6521c00-674e-4005-a9fa-52cf62c77b0e%2F98nzsb_processed.png&w=3840&q=75)
Transcribed Image Text:Bait and Tackle
Balance Sheet
As at December 31
2017
2016
$24,000
50,000
88.000
Cash
$39,000
Accounts receivable
64,000
Inventory
Equipment
Accumulated depreciation
Total assets
58,000
325,000
250,000
(92.000)
$394.000
(125,000)
$287,000
Accounts payable
Income taxes payable
Bank loan payable
$32,000
$40,000
10,000
11,000
20,000
Common shares
60,000
50,000
Retained earnings
Total liabilities and shareholders` equity
272.000
$394.000
186.000
$287.000
![Bait and Tackle
Income Statement
For the Year Ended December 31, 2017
Sales
Cost of goods sold
Gross profit
Operating expenses
Operating income
Interest expense
Income before taxes
Income taxes
Net income
$635,000
320.000
315,000
135.000
180,000
1.000
179,000
43.000
$136.000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcf68fe84-9abd-4512-810d-f8430ebdaf65%2Fe6521c00-674e-4005-a9fa-52cf62c77b0e%2Ft6e87pg_processed.png&w=3840&q=75)
Transcribed Image Text:Bait and Tackle
Income Statement
For the Year Ended December 31, 2017
Sales
Cost of goods sold
Gross profit
Operating expenses
Operating income
Interest expense
Income before taxes
Income taxes
Net income
$635,000
320.000
315,000
135.000
180,000
1.000
179,000
43.000
$136.000
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