The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $102,500 of other operating expenses during the year. Paid the sales tax due on $185,000 of the service revenue. The sales tax on the balance of the revenue is not due until Year 3. b-4. Prepare a statement of cash flows for Year 1 and Year 2.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 3RE: In the current year, Madison Corporation had 50,000 of taxable income at a tax rate of 25%. During...

See similar textbooks

Related questions

Question

The following transactions apply to Walnut Enterprises for Year 1, its first year of operations:

Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1.
Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent.
Paid $62,000 cash for other operating expenses during the year.
Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2.
Recognized the accrued interest at December 31, Year 1.

The following transactions apply to Walnut Enterprises for Year 2:

Paid the balance of the sales tax due for Year 1.
Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent.
Repaid the principal of the note and applicable interest on April 1, Year 2.
Paid $102,500 of other operating expenses during the year.
Paid the sales tax due on $185,000 of the service revenue. The sales tax on the balance of the revenue is not due until Year 3.

b-4. Prepare a statement of cash flows for Year 1 and Year 2.

Expert Solution

Explanation -

Statement of Cash Flow -

Statement of Cash Flow is a financial statement. That includes inflow and outflow of cash during the financial year. Such moments in cash is due to three significant activities operating, Investing and financing.

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here