Concept explainers
Statement of
The comparative
Dec. 31, 20Y3 | Dec. 31, 20Y2 | |
Assets |
||
Cash | $ 155,000 | $ 150,000 |
450,000 | 400,000 | |
Inventories | 770,000 | 750,000 |
Investments | 0 | 100,000 |
Land | 500,000 | 0 |
Equipment | 1,400,000 | 1,200,000 |
Accumulated |
(600,000) | (500,000) |
Total assets Liabilities and |
$2,675,000 | $2,100,000 |
Accounts payable (merchandise creditors) | $ 340,000 | $ 300,000 |
Accrued expenses payable (operating expenses) | 45,000 | 50,000 |
Dividends payable | 30,000 | 25,000 |
Common stock, $4 par | 700,000 | 600,000 |
Paid-in capital: Excess of issue price over par—common stock | 200,000 | 175,000 |
1,360,000 | 950,000 | |
Total liabilities and stockholders' equity | $2,675,000 | $2,100,000 |
The income statement for the year ended December 31, 20Y3, is as follows:
Sales | $ 3,000,000 | |
Cost of goods sold | 1,400,000 | |
Gross profit | $ 1,600,000 | |
Operating expenses: | ||
Depreciation expense | $ 100,000 | |
Other operating expenses. | 950,000 | |
Total operating expenses | 1,050,000 | |
Operating income | $550,000 | |
Gain on sale of investments | 75,000 | |
Income before income tax | $625,000 | |
Income tax expense | 125,00 | |
Net income | $ 500,000 |
Additional data obtained from an examination of the* accounts in the ledger for 20Y3 are as follows:
- A. The investments were sold for $175,000 cash.
- B. Equipment and land were acquired for cash.
- C. There were no disposals of equipment during the year.
- D. The common stock was issued for cash.
- E. There was a $90,000 debit to Retained Earnings for cash dividends declared.
Instructions
Prepare a .statement of cash flows, using the direct method of presenting cash flows from operating activities.
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