WileyPLUS: MywileyPLUS I Help 1 Contact Us I Leg Out WileyPLUS Kieso, Intermedia

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WileyPLUS: MywileyPLUS I Help 1 Contact Us I Leg Out WileyPLUS Kieso, Intermediate Accounting, 15e INTERMEDIATE ACCT (/ACCT 300/301) VEW PRINTER VERSION Question 3 Brecker Inc, a greeting card company, had the following statements prepared as of December 31, 2014 COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2014 AND 2013 /31/14 $5,904 62,191 34,956 39,926 5,004 Cash Accounts receivable $8,859 49,135 18,047 59,990 3,826 53,420 127,370 Prepaid rent Equipment (35,029 (25,176) 46,158 Copyrights Total assets 50,018 $292,069 $312,530 Accounts payable Income taxes payable Salaries and wages payable Short-term loans payable Long-term loans payable Common stock, $10 par Contributed capital, common stock Retained earnings Total liabilities & stockholders' equity $46,163 $41,971 5,904 3,822 10,170 66,811 103,630 32,960 49,756 26,801 $312,530 $292,069 3,940 8,111 7,875 60,095 103,630 32,960 INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2014 Sales revenue Cost of goods sold Gross profit Operating expensers Operating income Interest expense Gain on sale of equipment Income before tax Income tax expense Net income 339,31 174,360 164,959 119,970 44,989 $11,490 2,044 9,446 35,543 6,712 $28,831 Additional information: 1. Dividends in the amount of $5,876 were declared and paid during 2014. 2. Depreciation expense and amortization expense are included in operating expenses 3. No unrealized gains or losses have occurred on the investments during the year. 4. Equipment that had a cost of $28,300 and was 70% depreciated was sold during 2014. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a -sign e.g.-15,000 or in parenthesis e-g. (15,000)) Statement of Cash Flows For the Year Ended December 31. 2014 Cash Flows from

Explanation / Answer

Income tax paid during the year = Opening Balance + Provided during year - Closing Balance

= 3940 + 6712 - 5904 = 4748

Depreciation expense = Accumulated depreciation closing - Accumulated depreciation Opening

= 35029 - 25176 = 9853

Amortisation expense = 3860

Equipment A/c

Particulars Amount Particulars Amount Opening Balance 127370 Sale 28300 Accumulated Dep (28300*0.7) 19810 Purchase (Balancing fig.) 34540 Closing Balance 153420 181720 181720

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