Question : 200. Use the following financial statements and additional information to (1) : 1257735

 

200. Use the following financial statements and additional information to (1) prepare a complete statement of cash flows for the year ended December 31, 2013. The cash provided or used by operating activities should be reported using the direct method, and (2) compute the company’s cash flow on total assets ratio for 2015.

Derby Company

Balance Sheets

At December 31

 

2015

 

2014

 

Assets:

 

 

 

 

   Cash……………………………..

$  85,600

 

$  65,200

 

   Accounts receivable, net…………………

72,850

 

56,750

 

   Merchandise inventory………………….

157,750

 

144,850

 

   Prepaid expenses……………………..

6,080

 

12,680

 

   Equipment………………………….

280,600

 

245,600

 

   Accumulated depreciation-Equipment…………

  (80,600

)

  (97,600

)

Total assets………………………….

$522,280

 

$427,480

 

 

 

 

 

 

Liabilities:

 

 

 

 

   Accounts payable……………………..

$  52,850

 

$  45,450

 

   Income taxes payable…………………..

15,240

 

12,240

 

   Notes payable (long term)………………..

    59,200

 

    79,200

 

Total liabilities………………………..

$127,290

 

$136,890

 

Equity:

 

 

 

 

   Common stock……………………….

200,000

 

150,000

 

Paid-in capital in excess of par……………….

53,000

 

40,000

 

   Retained earnings……………………..

  141,990

 

    100,590

 

Total equity………………………….

$394,990

 

$290,590

 

Total liabilities and equity………………….

$522,280

 

$427,480

 

 

 

 

 

 

 

Derby Company

Income Statement

For Year Ended December 31, 2015

Sales……………………….

 

$488,000

 

Cost of goods sold……………….

$212,540

 

 

Depreciation expense…………….

43,000

 

 

Other operating expenses…………..

106,260

 

 

Interest expense………………..

    6,400

(368,200

)

Other gains (losses):

 

 

 

   Gain on sale of equipment…………

 

    4,700

 

Income before taxes……………..

 

124,500

 

Income taxes expense…………….

 

    41,100

 

Net income…………………..

 

$   83,400

 

 

 

 

 

 

Additional Information

a. A $20,000 note payable is retired at its carrying value in exchange for cash.b. The only changes affecting retained earnings are net income and cash dividends paid.c. New equipment is acquired for $120,000 cash.d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700.e. Prepaid expenses relate to Other Expenses on the income statement.f. All purchases and sales of merchandise inventory are on credit.