Concept explainers
Statement of Cash Flows, Indirect Method, Complex Accounts, Disclosures. Norwich Manufacturing Inc provided you with the following comparative balance sheets and income statement
Norwich Manufacturing, Inc. Balance Sheets At December 31 |
||
Assets | Current Year | Prior Year |
Current Assets | ||
Cash | $ 45,000 | $ 22,000 |
Available-for-Sale Debt Investments | 58,000 | 82,000 |
Accounts Receivable - net | 95,000 | 55,000 |
Merchandise Inventory | 135,000 | 95,000 |
Total Current Assets | $ 333,000 | $254,000 |
Norwich Manufacturing, Inc. Balance Sheets At December 31 |
||
Current Year | Prior Year | |
Noncurrent Assets | ||
Investments in Affiliate Companies | $ 265,000 | $ 100,500 |
Property. Plant, and Equipment - net | 1,364,500 | 1,530,500 |
Intangible Assets - net | 87,500 | 125,000 |
Total Noncurrent Assets | $ 1,717,000 | $1,756,000 |
Total Assets | $2,050,000 | $2,010,000 |
Liabilities | ||
Current Liabilities |
Current Portion of Long-Term Debt | $ 25,000 | $ 65,800 |
Accounts Payable | 187,000 | 128,500 |
Dividends Payable | 75,000 | 55,000 |
Income Taxes Payable | 65,800 | 58,500 |
Total Current Liabilities | $ 352,800 | $ 307,800 |
Noncurrent Liabilities | ||
Bonds Payable | $ 400,000 | $ 400,000 |
Less: Discount on Bonds | (128,500) | (145,000) |
Notes Payable | 225,500 | 225,000 |
62,500 | 72,500 | |
Net Obligations under Pension Plans | 80,000 | 60,000 |
Total Noncurrent Liabilities | $ 639,500 | $ 612,500 |
Total Liabilities | $ 992,300 | $ 920,300 |
Shareholders' Equity | ||
Common Stock. $1 par value | $ 135,000 | $ 135,000 |
Additional Paid-in Capital in Excess of Par - Common | 351,500 | 351,500 |
Additional Paid-in Capital - Stock Options | 16,500 | 0 |
685,000 | 523,700 | |
Accumulated Other Comprehensive Income | (130,300) | 79,500 |
Total Shareholders' Equity | $ 1,057,700 | $1,089,700 |
Total Liabilities and Shareholders' Equity | $2,050,000 | $2,010,000 |
Norwich Manufacturing, Inc. Income Statement For the Current Year Ended December 31 |
|
Sales | $2,433,244 |
Cost of Goods Sold | 1,459,946 |
Gross Profit | $ 973,298 |
Selling, General, and Administrative Expenses | $ 59,800 |
Pension Expense | 260,510 |
Bad Debt Expense | 1,650 |
Depreciation Expense | 19,470 |
Amortization Expense | 7,425 |
Total Operating Expenses | $ 348,855 |
Operating Income | $ 624,443 |
Interest Expense | $ (55,110) |
Investment Income (includes gain on sale) | 55,000 |
Equity Earnings from Affiliate Companies | 164,500 |
Income before Tax | $ 788,833 |
Income Tax Expense | (301,873) |
Net Income | $ 486,960 |
Additional information
- Norwich sold available-for-sale investments that had been acquired for $55,000 at a gain of $40, 500 It included this gain in investment income on the income statement.
- The company acquired additional shares as investments to be earned at fair value It accounted for all investments except for investments carried under the equity method as available-for-sale securities It recorded a $9, 000 unrealized loss for the current year.
- It reported accounts receivable net of the allowance for
bad debts - It sold equipment at book value.
- It did not increase its percentage ownership of its equity investee (affiliate company)
- It sold one of its franchises at book value
- It signed a $100,000 promissory note issued by an equipment dealer in the acquisition of a plant asset
- It did not borrow additional cash funds during the year
Required
Prepare Norwich Manufacturing s cash flow statement for the current year using the indirect method Present required disclosures.
Want to see the full answer?
Check out a sample textbook solutionChapter 22 Solutions
Intermediate Accounting
Additional Business Textbook Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Managerial Accounting (4th Edition)
Managerial Accounting
Financial Accounting, Student Value Edition (4th Edition)
Accounting For Governmental & Nonprofit Entities
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education