The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized. Current Year Prior Year Balance Sheet Assets Cash $ 112,500 $ 130,500 Accounts receivable 140,000 122,500 Merchandise inventory 105,000 113,750 Property and equipment 200,000 105,000 Less: Accumulated depreciation (58,000 ) (30,000 ) Total assets $ 499,500 $ 441,750 Liabilities: Accounts payable $ 17,500 $ 21,000 Salaries and Wages Payable 3,500 1,750 Notes payable, long-term 87,500 105,000 Stockholders’ Equity: Common stock 160,000 140,000 Retained earnings 231,000 174,000 Total liabilities and stockholders’ equity $ 499,500 $ 441,750 Income Statement Sales $ 500,000 Cost of goods sold 260,000 Depreciation expense 28,000 Other expenses 125,000 Net income $ 87,000
Other information from the company’s records includes the following:
|a.||Bought equipment for cash, $95,000.|
|b.||Paid $17,500 on long-term note payable.|
|c.||Issued new shares of common stock for $20,000 cash.|
|d.||Cash dividends of $30,000 were declared and paid to stockholders.|
|e.||Accounts Payable arose from inventory purchases on credit.|
Income tax expense ($21,750) and interest expense ($5,250) were paid in full at the end of both years and are included in Other Expenses.
Prepare the statement of cash flows using the indirect method. Include any supplemental disclosures. (Enter any deductions and cash outflows as a negative value.)
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