Blake Weaver, Cook Enterprises’ controller, is preparing the financial statement
ID: 2481792 • Letter: B
Question
Blake Weaver, Cook Enterprises’ controller, is preparing the financial statements for 2013. He has completed the comparative balance sheets and income statement, which follow, and has gathered this additional information:• On December 31, 2013, Cook sold a piece of equipment with an original cost of $25,000 for $30,000 cash. The equipment had a book value of $13,000. • On February 1, 2013, Cook issued $100,000 of common stock to raise cash in anticipation of the purchase of a new building later in the year. • On February 2, 2013, Cook took out a ten-year $75,000 long-term loan to provide the remaining funds needed to purchase the building. • On May 15, 2013, Cook paid $150,000 for the new building. • The company repaid $4,600 of the long-term debt before the end of the year.
Cook Enterprises
Income Statement
For the Year Ended December 31, 2013
Sales revenue $1,070,000 Gain on equipment sale 17,000 Total revenue 1,087,000 Cost of goods sold 700,000 Operating expenses Depreciation expense $30,000 Interest expense 7,400 Wages expenses 175,000 Other expenses 16,000 228,400 Income before taxes 158,600 Tax expense 63,400 Net income $95,200
Cook Enterprises
Comparative Balance Sheets
As of December 31 2013
2013 2012 Cash $124,200 $40,400 Accounts receivable, net 287,200 269,800 Inventory 125,000 95,000 Total current assets 536,400 405,200 Property, plant, & equipment 297,000 160,000 Accumulated depreciation 90,000 60,000 Net property, plant, & equipment 207,000 100,000 Total assets $743,400 $505,200 Accounts payable $103,000 $120,000 Wages payable 27,000 30,000 Accrued liabilities 20,000 25,000 Taxes payable 17,600 20,000 Mortgage payable 70,400 0 Total liabilities 238,000 195,000 Common stock 350,000 250,000 Retained earnings 155,400 60,200 Total stockholders’ equity 505,400 310,200 Total liabilities & stockholders’ equity $743,400 $505,200 Blake Weaver, Cook Enterprises’ controller, is preparing the financial statements for 2013. He has completed the comparative balance sheets and income statement, which follow, and has gathered this additional information:
• On December 31, 2013, Cook sold a piece of equipment with an original cost of $25,000 for $30,000 cash. The equipment had a book value of $13,000. • On February 1, 2013, Cook issued $100,000 of common stock to raise cash in anticipation of the purchase of a new building later in the year. • On February 2, 2013, Cook took out a ten-year $75,000 long-term loan to provide the remaining funds needed to purchase the building. • On May 15, 2013, Cook paid $150,000 for the new building. • The company repaid $4,600 of the long-term debt before the end of the year.
Cook Enterprises
Income Statement
For the Year Ended December 31, 2013
Sales revenue $1,070,000 Gain on equipment sale 17,000 Total revenue 1,087,000 Cost of goods sold 700,000 Operating expenses Depreciation expense $30,000 Interest expense 7,400 Wages expenses 175,000 Other expenses 16,000 228,400 Income before taxes 158,600 Tax expense 63,400 Net income $95,200
Cook Enterprises
Comparative Balance Sheets
As of December 31 2013
2013 2012 Cash $124,200 $40,400 Accounts receivable, net 287,200 269,800 Inventory 125,000 95,000 Total current assets 536,400 405,200 Property, plant, & equipment 297,000 160,000 Accumulated depreciation 90,000 60,000 Net property, plant, & equipment 207,000 100,000 Total assets $743,400 $505,200 Accounts payable $103,000 $120,000 Wages payable 27,000 30,000 Accrued liabilities 20,000 25,000 Taxes payable 17,600 20,000 Mortgage payable 70,400 0 Total liabilities 238,000 195,000 Common stock 350,000 250,000 Retained earnings 155,400 60,200 Total stockholders’ equity 505,400 310,200 Total liabilities & stockholders’ equity $743,400 $505,200 Cook Enterprises
Comparative Balance Sheets
As of December 31 2013
2013 2012
Problem 13-27
Blake Weaver, Cook Enterprises’ controller, is preparing the financial statements for 2013. He has completed the comparative balance sheets and income statement, which follow, and has gathered this additional information:• On December 31, 2013, Cook sold a piece of equipment with an original cost of $25,000 for $30,000 cash. The equipment had a book value of $13,000. • On February 1, 2013, Cook issued $100,000 of common stock to raise cash in anticipation of the purchase of a new building later in the year. • On February 2, 2013, Cook took out a ten-year $75,000 long-term loan to provide the remaining funds needed to purchase the building. • On May 15, 2013, Cook paid $150,000 for the new building. • The company repaid $4,600 of the long-term debt before the end of the year.
Cook Enterprises
Income Statement
For the Year Ended December 31, 2013
Sales revenue $1,070,000 Gain on equipment sale 17,000 Total revenue 1,087,000 Cost of goods sold 700,000 Operating expenses Depreciation expense $30,000 Interest expense 7,400 Wages expenses 175,000 Other expenses 16,000 228,400 Income before taxes 158,600 Tax expense 63,400 Net income $95,200
Cook Enterprises
Comparative Balance Sheets
As of December 31 2013
2013 2012 Cash $124,200 $40,400 Accounts receivable, net 287,200 269,800 Inventory 125,000 95,000 Total current assets 536,400 405,200 Property, plant, & equipment 297,000 160,000 Accumulated depreciation 90,000 60,000 Net property, plant, & equipment 207,000 100,000 Total assets $743,400 $505,200 Accounts payable $103,000 $120,000 Wages payable 27,000 30,000 Accrued liabilities 20,000 25,000 Taxes payable 17,600 20,000 Mortgage payable 70,400 0 Total liabilities 238,000 195,000 Common stock 350,000 250,000 Retained earnings 155,400 60,200 Total stockholders’ equity 505,400 310,200 Total liabilities & stockholders’ equity $743,400 $505,200
Explanation / Answer
Supporting computations Cost of goods sold 700000 +Increase in inventory(125000-95000) 30000 +Decrease in accounts payable(103000-120000) 17000 Payment to supplier 747000 Collections from customer Sales Revenue 1070000 Add:opening balance of AR 269800 Less: Closing bal of AR -287200 Collections from customer 1052600 Payment to employees Wages expenses 175000 Decrease in wages payble(27000-30000) 3000 Payment to employees 178000 Payment for other expenses 16000 Payment for Income tax Taxexpenses 63400 Decrease in tax payable(20000-17600) 2400 65800 Note: Interest expense is not an operating expense
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