
Concept explainers
Statement of
The comparative
Dec 31, 20Y4 | Dec. 31,20Y3 | |
Assets | ||
Cash.................................. | $ 661,920 | $ 683,100 |
992,640 0 | 914,400 | |
Inventories............................................... | 1,394,40 | 1,363,800 |
Investments.............................................. | 0 | 432,000 |
Land..................................................... | 960,000 | 0 |
Equipment................................................ | 1,224,000 | 984,000 |
Accumulated |
(481,500) | (368,400) |
Total assets............................................ | $4,751,460 | $4,008,900 |
Liabilities and |
||
Accounts payable......................................... | $1,080,000 | $ 966,600 |
Accrued expenses payable................................ | 67,800 | 79,200 |
Dividends payable.................................. | 100,800 | 91,200 |
Common stock. $S par .................................... | 130,000 | 30,000 |
Paid in capital: Excess of issue price over par—common stock...... | 950,000 | 450,000 |
2,422,860 | 2,391,900 | |
Total liabilities and stockholders' equity.................. | $4,751,460 | $4,008,900 |
The income statement for the year ended December 31, 20Y4, is as follows:
Sales.......................................... | $4,512,000 | |
Cost of merchandise sold....................... | 2,352,000 | |
Gross profit.................................... | $2,160,000 | |
Operating expenses: | ||
Depreciation expense....................... | $ 113,100 | |
Other operating expenses................... | 1,344,840 | |
Total operating expenses................. | 1,457,940 | |
Operating income.............................. | $ 702,060 | |
Other income: | ||
Gain on sale of investments.................. | 156,000 | |
Income before income tax...................... | $ 858,060 | |
Income tax expense............................ | 299,100 | |
Net income.................................... | $ 558,960 |
Additional data obtained from an examination of the accounts in the ledger for 20Y4 are as follows:
a. Equipment and land were acquired for cash.
b. There were no disposals of equipment during the year.
c. The investments were sold for $588,000 cash.
d. The common stock was issued for cash.
e. There was a $528,000 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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