KURTZEL COMPANY Comparative Balance Sheets December 31 Assets 2014 2013 $ 35,000
ID: 2480082 • Letter: K
Question
KURTZEL COMPANY
Comparative Balance Sheets
December 31
Assets
2014
2013
$ 35,000
$ 20,000
20,000
14,000
28,000
20,000
60,000
78,000
(32,000
)
(24,000
)
$111,000
$108,000
Liabilities and Stockholders’ Equity
$ 19,000
$ 15,000
7,000
8,000
17,000
33,000
18,000
14,000
50,000
38,000
$111,000
$108,000
KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014
$242,000
175,000
67,000
$18,000
6,000
24,000
43,000
3,000
40,000
8,000
$ 32,000
Prepare a statement of cash flows for Kurtzel Company using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
KURTZEL COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2014
KURTZEL COMPANY
Comparative Balance Sheets
December 31
Assets
2014
2013
Cash$ 35,000
$ 20,000
Accounts receivable20,000
14,000
Inventory28,000
20,000
Property, plant, and equipment60,000
78,000
Accumulated depreciation(32,000
)
(24,000
)
Total$111,000
$108,000
Liabilities and Stockholders’ Equity
Accounts payable$ 19,000
$ 15,000
Income taxes payable7,000
8,000
Bonds payable17,000
33,000
Common stock18,000
14,000
Retained earnings50,000
38,000
Total$111,000
$108,000
KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014
$242,000
Cost of goods sold175,000
Gross profit67,000
Selling expenses$18,000
Administrative expenses6,000
24,000
Income from operations43,000
Interest expense3,000
Income before income taxes40,000
Income tax expense8,000
Net income$ 32,000
Additional data:
1. Depreciation expense was $17,500. 2. Dividends declared and paid were $20,000. 3. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had accumulated depreciation of $9,500 at the time of sale.
Further analysis reveals the following.
1. Accounts payable pertain to merchandise suppliers. 2. All operating expenses except for depreciation were paid in cash. 3. All depreciation expense is in the selling expense category. 4. All sales and purchases are on account.
Explanation / Answer
KURTZEL COMPANY Statement of Cash Flows For the Year Ended December 31, 2014 Amount($) Amount($) Cash Flows from Operating ActivitiesCash Receipts from Customers 236000 Less: Cash Payments To Suppliers 179000 For Operating Expenses 24000 For Income Taxes 9000 For Interest 3000 Net Cash Provided by Operating Activities
21000 Cash Flows from Investing Activities Sale Of equiplment 8500 Sale of Property,Plant and Equipement 17500 Net Cash used by Investing Activities
26000 Cash Flows from Financing Activities Issuance of Common Stock 4000 Redemption of Bonds -16000 Payment of Dividends -20000 Net Cash used by Financing Activities
-32000 Net Increase in Cash
15000 Cash at Beginning of Period
20000 Cash at End of Period 35000
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