Question : 130. Below an Income Statement and a Statement of Cash Flows : 1230570

 

130. Below is an Income Statement and a Statement of Cash Flows for Morrissey Corporation for Year 8. 

Morrissey CorporationIncome StatementFor the Year Ended December 31, Year 8

Sales Revenue

 

$11,400

Gain on Sale of Equipment

 

60

Interest Revenue

 

       16

Total Revenues

 

$11,476

Cost of Goods Sold

 

(7,070)

Selling and Administrative Expense

 

(2,240)

Interest Expense

 

(210)

Income Tax Expense

 

    (752)

Net Income

 

$  1,204

 

 

 

 

Morrissey CorporationStatement of Cash FlowsFor the Year Ended December 31, Year 8

Operations

 

Net Income

$1,204 

Depreciation

370 

Gain on Sale of Equipment

(60)

Increase in Accounts Receivable

(160)

Increase in Prepayments

(70)

Decrease in Income Tax Payable

(25)

Decrease in Other Current Liabilities

(150)

Decrease in Inventories

140 

Increase in Accounts Payable-Merchandise

     175 

Cash Flow from Operations

$1,424 

Investing

 

Sale of Equipment

$     310 

Acquisition of Property, Plant and Equipment

(610)

Acquisition of Marketable Securities

  (1,300)

Cash Flow from Investing

$(1,600)

Financing

 

Decrease in Short-term Borrowing

$(120)

Increase in Long-term Debt

550 

Increase in Common Stock

400 

Decrease in Long-term Debt

(200)

Dividends

  (390)

Cash Flow from Financing

$  240 

Change in Cash

$    64 

Cash-January 1, Year 8

    850 

Cash-December 31, Year 8

$  914 

 

 

Required:Respond to each of the following questions. 

a.

Compute the amount of cash collected from customers during Year 8.

b.

Compute the amount of cash paid to suppliers for merchandise during Year 8.

c.

Compute the amount of income taxes paid to governmental agencies during Year 8.

d.

Property, plant and equipment (at cost) had a balance of $3,700 on January 1, Year 8 and $3,940 on December 31, Year 8. Accumulated depreciation had a balance of $1,290 on January 1, Year 8 and $1,540 on December 31, Year 8. Give the journal entry that Morrissey Corporation made in its accounting records during Year 8 to record the sale of the equipment.

e.

The balance in the retained earnings account on December 31, Year 8 after closing entries was $1,154. Compute the balance in the retained earnings account on January 1, Year 8.

 

 

 

131. At different points in their existence, companies will have different cash inflow and outflow requirements. Such differences make intercompany comparisons difficult, even within the same industry.Required: 

a.

Consider a start-up company in the software development industry. What might its operating, investing, and financing cash flows look like in general? Provide examples where appropriate.

b.

Consider a mature auto dealership. What might its operating, investing, and financing cash flows look like in general? Provide examples where appropriate.

 

 

 

 

 

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