Question : 146. The Little Company reported net income of $150,000 for the : 1234264

146. The Little Company reported net income of $150,000 for the current year. Depreciation recorded on buildings and equipment amounted to $65,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: 

 

End of Year

Beginning of Year

Cash

$20,000

$15,000

Accounts receivable

19,000

32,000

Inventories

50,000

65,000

Accounts payable

12,000

18,000

 

 

 

InstructionsPrepare the cash flows from the operating activities section of the statement of cash flows using the indirect method. 

147. The net income reported on an income statement for the current year was $55,000. Depreciation recorded on fixed assets for the year was $24,000. Balances of the current asset and current liability accounts at the end and beginning of the year are listed below. Prepare the cash flows from operating activities section of a statement of cash flows using the indirect method. 

 

End

Beginning

Cash

$65,000

$  70,000

Accounts receivable (net)

70,000

63,000

Inventories

85,000

102,000

Prepaid expenses

4,000

4,500

Accounts payable

 

 

  (merchandise creditors)

50,000

58,000

Cash dividends payable

4,500

6,500

Salaries payable

6,000

7,500

 

 

 

148. On the basis of the following data for Seller Co. for 2008 and the preceding year ended December 31, 2007, prepare a statement of cash flows. Use the indirect method of reporting cash flows from operating activities. Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000. 

 

Year

Year

 

   2008 

   2007 

Cash

$90,000 

$  78,000 

Accounts receivable (net)

78,000 

85,000 

Inventories

106,500 

90,000 

Equipment

410,000 

370,000 

Accumulated depreciation

(150,000)

(158,000)

 

$534,500 

$465,000 

 

 

 

Accounts payable (merchandise creditors)

$  53,500 

$  55,000 

Cash dividends payable

5,000 

4,000 

Common stock, $10 par

200,000 

170,000 

Paid-in capital in excess of par–

 

 

  common stock

62,000 

60,000 

Retained earnings

  214,000 

  176,000 

 

$534,500 

$465,000 

 

 

 

 

149. Balances of the current asset and current liability accounts at the end and beginning of the year are as follows: 

 

End

Beginning

Cash

$  62,000

$73,000

Accounts receivable (net)

75,000

60,000

Inventories

54,000

47,000

Accounts payable

 

 

  (merchandise creditors)

43,000

37,000

Salaries payable

2,800

3,800

Sales (on account)

210,000

 

Cost of merchandise sold

70,000

 

Operating expenses other than depreciation

67,000

 

 

 

 

Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows. 

150. The comparative balance sheet of Max Company, for 2008 and the preceding year ended December 31, 2007 appears below in condensed form: 

 

Year

Year

 

2008

2007

 

 

 

Cash

$  45,000 

$  53,500 

Accounts receivable (net)

51,300 

58,000 

Inventories

147,200 

135,000 

Investments

60,000 

Equipment

493,000 

375,000 

Accumulated depreciation-equipment

(113,700)

(128,000)

 

$622,800 

$553,500 

Accounts payable

$  61,500 

$  42,600 

Bonds payable, due 2012

….. 

100,000 

Common stock, $10 par

250,000 

200,000 

Paid-in capital in excess of par–

 

 

  common stock

75,000 

50,000 

Retained earnings

  236,300 

  160,900 

 

$622,800 

$553,500 

 

 

 

The income statement for the current year is as follows: 

Sales

 

$623,000 

Cost of merchandise sold

 

  348,500 

Gross profit

 

$274,500 

Operating expenses:

 

 

  Depreciation expense

$24,700

 

  Other operating expenses

  75,300

  100,000 

Income from operations

 

$174,500 

Other income:

 

 

  Gain on sale of investment

$  5,000

 

Other expense:

 

 

  Interest expense

  12,000

     (7,000)

Income before income tax

 

$167,500 

Income tax

 

    64,100 

Net income

 

$103,400 

 

 

 

Additional data for the current year are as follows: 

(a)

Fully depreciated equipment costing $39,000 was scrapped, no salvage, and equipment was purchased for $157,000.

(b)

Bonds payable for $100,000 were retired by payment at their face amount.

(c)

5,000 shares of common stock were issued at 15 for cash.

(d)

Cash dividends declared were paid $28,000.

(e)

All sales are on account.

 

 

Prepare a statement of cash flows, using the direct method of reporting cash flows from operating activities. 

 

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