31-Dec 2009 2010 Cash $42,000 $63,000 Accounts receivable (net) 84,000 151,200 I

Question

31-Dec
2009 2010
Cash $42,000 $63,000
Accounts receivable (net) 84,000 151,200
Inventory 168,000 201,600
Land 58,800 21,000
Equipment 504,000 789,600
TOTAL $856,800 $1,226,400
Accumulated depreciation $84,000 $115,600
Accounts payable 50,400 86,000
Notes payable - Short-term 67,200 29,400
Notes payable - Long-term 168,000 302,400
Common stock 420,000 487,200
Retained earnings 67,200 205,800
TOTAL $856,800 $1,226,400

Additional data for 2010:
1 Net income was $235,200.
2 Depreciation was $31,600.
3 Land was sold at its original cost.
4 Dividends of $96,600 were paid.
5 Equipment was purchased for $84,000 cash.
6 A long-term note for $201,600 was used to pay for an equipment purchase.
7 Common stock was issued to pay a $67,200 long-term note payable.
Noncash investing and financing activities
Payment of long-term note payable with issuance of $67,200 of common stock

Explanation / Answer

Net Income 235,200.00 Add : Depreciation 31,600.00 Cash Profits 266,800.00 Add : Increase in Accounts Payable 35,600.00 Decrease in Notes Payable (37,800.00) Less: Increase in Accounts Receivable (67,200.00) Increase in Inventories (33,600.00) Cash From Operating Activities 163,800.00 Investing Activities Sale of Land 37,800.00 Purchase of Equipment (84,000.00) Cash Used for Investing Activities (46,200.00) Financing Activities : Dividends paid (96,600.00) Increase in Cash Blance 21,000.00 Add : Opening Cash Balance 42,000.00 Closing Cash Balnce 63,000.00

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