Jackson Ski Haus had the following statements prepared as of December 31, 2014.
ID: 2419051 • Letter: J
Question
Jackson Ski Haus had the following statements prepared as of December 31, 2014.
JACKSON SKI HAUS
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31
2014 2013
Cash $ 2,500 $ 4,000
Accounts receivable 103,000 97,000
Short-term investments (Available-for-sale) 96,000 121,000
Inventories 91,000 54,000
Prepaid insurance 4,000 6,000
Ski equipment 89,000 43,000
Accumulated depr.—equipment (23,500) (18,000)
Trademarks 79,000 83,000
Total assets $441,000 $390,000
Accounts payable $ 92,200 $ 75,000
Income taxes payable 21,800 15,700
Wages payable 4,000 9,000
Short-term loans payable to bank 23,500 –0–
Long-term loans payable 75,000 125,000
Common stock, $1 par 100,000 100,000
Additional paid-in capital 20,000 20,000
Retained earnings 104,500 45,300
Total liabilities & equity $441,000 $390,000
JACKSON SKI HAUS
INCOME STATEMENT
FOR THE YEAR ENDING DECEMBER 31, 2014
Sales $540,200
Cost of goods sold 302,000
Gross margin 238,200
Operating expenses 94,000
Operating income 144,200
Interest expense 20,500
Loss on sale of equipment 4,000
Income before income tax 119,700
Income tax expense 40,500
Net income $ 79,200
Additional information:
1. Dividends in the amount of $20,000 were declared and paid during 2014.
2. Depreciation expense and amortization expense are included in operating expenses.
3. Equipment that had a cost of $25,000 and was 20% depreciated was sold during 2014.
Instructions
Prepare a statement of cash flows using the indirect method.
Explanation / Answer
Preparation of cash flows using the indirect method
Cash flows from operating activities
Net income
79,200
Adjustments for:
Depreciation
5,200
Deffered taxes
6,100
Loss on sale of equipment
4,000
15,300
Increase in trade receivables
-6,000
Decrease in trade payables
17,500
Increase in Investoreies
-37,000
Increase in short term liability
23,500
Increase in wage payable
-5000
Decrease in trademark
4000
Decrease in Prepaid insurance
2000
-1000
Cash generated from operations
93,500
Cash flows from investing activities
Proceeds from sale of equipment
16,000
Sale of short term investments
25,000
Ourchase of equipment
-71,000
Net cash used in investing activities
-30,000
Cash flows from financing activities
Dividends paid
-20,000
Long-term loans paid
-50,000
Net cash used in financing activities
-70,000
Net increase in cash and cash equivalents
-6,500
Cash and cash equivalents at beginning of period
4,000
Cash and cash equivalents at end of period
2,500
Cash flows from operating activities
Net income
79,200
Adjustments for:
Depreciation
5,200
Deffered taxes
6,100
Loss on sale of equipment
4,000
15,300
Increase in trade receivables
-6,000
Decrease in trade payables
17,500
Increase in Investoreies
-37,000
Increase in short term liability
23,500
Increase in wage payable
-5000
Decrease in trademark
4000
Decrease in Prepaid insurance
2000
-1000
Cash generated from operations
93,500
Cash flows from investing activities
Proceeds from sale of equipment
16,000
Sale of short term investments
25,000
Ourchase of equipment
-71,000
Net cash used in investing activities
-30,000
Cash flows from financing activities
Dividends paid
-20,000
Long-term loans paid
-50,000
Net cash used in financing activities
-70,000
Net increase in cash and cash equivalents
-6,500
Cash and cash equivalents at beginning of period
4,000
Cash and cash equivalents at end of period
2,500
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