Additional Information: A. Sold plant assets with a cost of $75,000 and accumula

Question

Additional Information: A.   Sold plant assets with a cost of $75,000 and accumulated depreciation of $7,500,        yielding a gain of disposal of plant assets of $12,000. B.   Purchased plant assets by paying cash. C.   Issued Notes Payable for Cash. D.   Sold investment in Walking Dead Co at cost (zero gain/loss). E.   Issued Common Stock for Cash. F.   Purchased Treasury Stock for Cash. Requirements: Prepare, in good form, a Statement of Cash Flows using the indirect method. Statement of Cash Flows Angela's Cleaning Consortium Seymour-Johnson, Inc. Comparative Balance Sheet Income Statement December 31, 2020 and 2019 For the Year Ended December 31, 2020 2020 2019 Net sales $ 386,000 ASSETS Cost of goods sold     (212,000) Current assets Gross profit      174,000    Cash $    66,500 $    62,000 Operating expenses    Accounts receivable        95,000      113,000 Salaries and wages expense       (66,000)    Merchandise inventory      172,000      165,000 Depreciation expense       (25,000)       Total current assets      333,500      340,000 Other operating expenses       (28,000) Long-term investments Income from operations        55,000    Investment in Walking Dead Co.                 -        50,000 Other revenues and gains Property, buildings, and equipment      507,000      304,000    Interest revenue        15,000    Less: Accumulated depreciation       (59,500)       (42,000)    Dividend revenue          9,700 Total assets $ 781,000 $ 652,000    Gain on disposal of plant assets        12,000 Liabilities and Stockholders' Equity Other expenses and losses Current liabilities    Interest expense       (15,000)       Accounts payable $ 144,000 $ 175,000 Income before income taxes        76,700       Accrued liabilities        17,000        47,000 Income tax expense       (14,000)       Total current assets      161,000      222,000 Net Income $    62,700    Long-term Liabilities       Notes payable, long-term      160,000        90,000          Total liabilities      321,000      312,000 Stockholders' equity    Common stock      370,000      250,000    Retained earnings      140,000        90,000    Treasury stock       (50,000)                 -          Total Stockholders’ Equity      460,000      340,000 Total Liabilities & Stockholders' Equity $ 781,000 $ 652,000 Additional Information: A.   Sold plant assets with a cost of $75,000 and accumulated depreciation of $7,500,        yielding a gain of disposal of plant assets of $12,000. B.   Purchased plant assets by paying cash. C.   Issued Notes Payable for Cash. D.   Sold investment in Walking Dead Co at cost (zero gain/loss). E.   Issued Common Stock for Cash. F.   Purchased Treasury Stock for Cash. Requirements: Prepare, in good form, a Statement of Cash Flows using the indirect method.

Explanation / Answer

Statement of cashflows Cashflow from operating activities: Net income 62700 Adjustments: Gain on disposal of plant assets -12000 Depreciation expense 25000 Decrease in accounts receivable (113000-95000) 18000 Increase in merchandise inventory (172000-165000) -7000 Decrease in accounts payable (175000-144000) -31000 Decrease in accrued liabilities (47000-17000) -30000 Cashflow from operating activities (A) 25700 Cashflow from investing activities: Sale of plant assets (75000-7500+12000) 79500 Purchase of plant assets (Note:1) -278000 Sale of investments 50000 Cashflow from investing activities (B) -148500 Cashflow from financing activities: Issued notes payable (160000-90000) 70000 Issue of common stock (370000-250000) 120000 Purchase of treasury stock -50000 Dividend paid (Note:2) -12700 Cashflow from financing activities © 127300 Net increase in cash (A)+(B)+© 4500 Add:Beginning balance of cash 62000 Ending balance of cash 66500 Note:1-Cost of palant purchased Analyze Property,Buildings and equipment Beginning balance 304000 Less: Plant sold 75000 229000 Less:Ending balance 507000 Asset purchased 278000 Note:2-Dividend paid Analysis of retained earnings account Beginning balance 90000 Add: Net income 62700 152700 Less:Ending balance 140000 Dividend paid 12700

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