You are the controller for 21st Century Technologies. Your staff has prepared an
ID: 2419120 • Letter: Y
Question
You are the controller for 21st Century Technologies. Your staff has prepared an income statement for the current year and has developed the following additional information by analyzing changes in the company's balance sheet accounts.
21ST CENTURY TECHNOLOGIES INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2015 Revenue: Net sales $ 3,200,000 Interest revenue 40,000 Gain on sales of marketable securities 34,000 Total revenue and gains $ 3,274,000 Costs and expenses: Cost of goods sold $ 1,620,000 Operating expenses (including depreciation of $150,000) 1,240,000 Interest expense 42,000 Income tax expense 100,000 Loss on sales of plant assets 12,000 Total costs, expenses, and losses 3,014,000 Net income $ 260,000 Additional Information
1. Accounts receivable increased by $60,000.
2. Accrued interest receivable decreased by $2,000.
3. Inventory decreased by $60,000, and accounts payable to suppliers of merchandise decreased by $16,000.
4. Short-term prepayments of operating expenses increased by $6,000, and accrued liabilities for operating expenses decreased by $8,000.
5. The liability for accrued interest payable increased by $4,000 during the year.
6. The liability for accrued income taxes payable decreased by $14,000 during the year.
7. The following schedule summarizes the total debit and credit entries during the year in other balance sheet accounts:
Debit Entries Credit Entries
Marketable Securities $ 60,000 $ 38,000
Notes Receivable (cash loans made to borrowers) 44,000 28,000
Plant Assets (see paragraph 8) 500,000 36,000
Notes Payable (short-term borrowing) 92,000 82,000
Capital Stock 20,000
Additional Paid-in Capital—Capital Stock
160,000 Retained Earnings (see paragraph 9) 120,000 260,000
8. The $36,000 in credit entries to the Plant Assets account is net of any debits to Accumulated Depreciation when plant assets were retired. Thus, the $36,000 in credit entries represents the book value of all plant assets sold or retired during the year.
9. The $120,000 debit to Retained Earnings represents dividends declared and paid during the year. The $260,000 credit entry represents the net income shown in the income statement.
10. All investing and financing activities were cash transactions.
11. Cash and cash equivalents amounted to $244,000 at the beginning of the year and to $164,000 at year-end.
Instructions a. Prepare a statement of cash flows for the current year. Use the direct method of reporting cash flows from operating activities. (List any deduction in cash and cash outflows as negative amounts.)
Explanation / Answer
Answer :
Cash flow by direct method Cash received from customer 3140000 Interest received 42000 3182000 Cash paid to Suppliers & employee 1576000 Cash paid for Operating exp. 1104000 Interest paid 38000 Income tax paid 114000 2832000 Cash Flow from Operating Activities 350000 Marketable securities 12000 Note receivable -16000 Plant asset -476000 Note Payable -10000 -490000 Dividend declared & paid -120000 Capital Stock 20000 Additional Paid in capital 160000 60000 Net Cash Flow -80000 Cash at beginning 244000 Cash at ending 164000 Net Cash Flow -80000Related Questions
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