Guarlic corporation a merchandiser, recently completed its calendar-year 2015 op

Question

Guarlic corporation a merchandiser, recently completed its calendar-year 2015 operations, For the year, all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, all purchases of inventory are on credit, (4) all debits to Account Payable reflect cash payments for inventory, and (5) other Expenses are paid in advance and are initially debited to prepaid Expenses. The company's balance sheets and income statement follow. Additional information on Year 2015 Transactions a. The loss on the cash sale of equipment was $2,100 (details in b). Sold equipment costing $51,000, with accumulated depreciation of $22,850, for $26,050 cash. c. Purchased equipment costing $113,250 by paying $43,250 cash and signing a long-term note payable for the balance. d. Borrowed $5,000 cash by signing a short-term note payable. e. Paid $47,500 cash to reduce the long-term notes payable. f, Issued 3,000 shares of common stock for $15 cash per share. Declared and paid cash dividends of $ 53,600.

Explanation / Answer

Increase or decrease in assets and liabilities: 2015 2014 Difference Cash $        123,450 $              61,550 $                       61,900 Accounts receivables $          77,100 $              80,750 $                       (3,650) Inventory $        240,600 $            250,700 $                     (10,100) Prepaid expenses $          15,100 $              17,000 $                       (1,900) Equipment $        262,250 $            200,000 $                       62,250 Accumulated depreciation $       (110,750) $             (95,000) $                     (15,750) Accounts payable $          17,750 $            102,000 $                     (84,250) Short term notes payable $          15,000 $              10,000 $                         5,000 Long term notes payable $        100,000 $              77,500 $                       22,500 Paid in capital in excess of par $          30,000 $                      -   $                       30,000 Common stock $        215,000 $            200,000 $                       15,000 Retained earnings $        230,000 $            125,500 $                     104,500 Gazelle Corporation Statement of Cash Flow For the year ended 2015 Cash flow from operating activities: Net Income $        158,100 Adjustments: Depreciation $          38,600 Decrease in accounts receivable $            3,650 Decrease in inventory $          10,100 Decrease in prepaid expenses $            1,900 Decrease in Accounts payable $        (84,250) Loss on disposal of equipment $            2,100 Cash flow from operating activities: $          130,200 Cash flow from investing activities: Cash received from sale of equipment $          26,050 Cash paid for equipment $        (43,250) Net cash used for investing activities $          (17,200) Cash flow from financing activities: Cash received from short term notes $            5,000 Cash received from issuance of common stock $          15,000 Cash received in excess of par $          30,000 Cash paid for long term notes $        (47,500) Dividend paid $        (53,600) Net cash used for financing activities $          (51,100) Net increase in cash $            61,900 Cash balance at 31st Dec. 2014 $            61,550 Cash balance at 31st Dec. 2015 $          123,450

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