Kate Petusky prepared Addison Controls’ balance sheet and income statement for 2

Question

Kate Petusky prepared Addison Controls’ balance sheet and income statement for 2013. Before she could complete the statement of cash flows, she had to leave town to attend to a family emergency. Because the full set of statements must be provided to the auditors today, Addison’s president, Lance Meyers, has asked you to prepare the statement of cash flows. Meyers has provided you with the balance sheet and income statement that Petusky prepared, as well as some notes she made:

Addison Controls
Income Statement
For the Year Ended December 31, 2013 Sales revenue $127,900 Cost of goods sold 69,800   Gross margin 58,100 Selling expense
13,000 Administrative expense 8,000 Salaries expense 20,000 Depreciation expense 1,900 Interest expense 4,000 46,900 Income before gain and taxes 11,200 Gain on sale of land 900 Income tax expense 800   Net income $11,300
Addison Controls
Comparative Balance Sheets
As of December 31 2013 2012 Cash $5,100 $4,300 Accounts receivable, net 6,300 5,500 Inventory 31,700 34,200   Total current assets 43,100 44,000 Property, plant, & equipment, net 211,500 215,300   Total assets $254,600 $259,300 Accounts payable $3,400 $5,900 Accrued expenses 600 700 Salaries payable 1,800 1,500 Taxes payable 2,100 2,600 Bonds payable 60,000 50,000   Total liabilities 67,900 60,700 Common stock 125,000 125,000 Retained earnings 61,700 73,600   Total stockholders’ equity
186,700 198,600 Total liabilities & stockholders' equity $254,600 $259,300
• Equipment with an original cost of $35,000 was sold for $20,300. The book value of the equipment was $19,400. • On June 1, 2013, the company purchased new equipment for cash at a cost of $17,500. • At the end of the year, the company issued bonds payable for $10,000 cash. The bonds will mature on December 31, 2017. • The company paid $23,200 in cash dividends for the year. Kate Petusky prepared Addison Controls’ balance sheet and income statement for 2013. Before she could complete the statement of cash flows, she had to leave town to attend to a family emergency. Because the full set of statements must be provided to the auditors today, Addison’s president, Lance Meyers, has asked you to prepare the statement of cash flows. Meyers has provided you with the balance sheet and income statement that Petusky prepared, as well as some notes she made:

Addison Controls
Income Statement
For the Year Ended December 31, 2013 Sales revenue $127,900 Cost of goods sold 69,800   Gross margin 58,100 Selling expense
13,000 Administrative expense 8,000 Salaries expense 20,000 Depreciation expense 1,900 Interest expense 4,000 46,900 Income before gain and taxes 11,200 Gain on sale of land 900 Income tax expense 800   Net income $11,300
Addison Controls
Comparative Balance Sheets
As of December 31 2013 2012 Cash $5,100 $4,300 Accounts receivable, net 6,300 5,500 Inventory 31,700 34,200   Total current assets 43,100 44,000 Property, plant, & equipment, net 211,500 215,300   Total assets $254,600 $259,300 Accounts payable $3,400 $5,900 Accrued expenses 600 700 Salaries payable 1,800 1,500 Taxes payable 2,100 2,600 Bonds payable 60,000 50,000   Total liabilities 67,900 60,700 Common stock 125,000 125,000 Retained earnings 61,700 73,600   Total stockholders’ equity
186,700 198,600 Total liabilities & stockholders' equity $254,600 $259,300
• Equipment with an original cost of $35,000 was sold for $20,300. The book value of the equipment was $19,400. • On June 1, 2013, the company purchased new equipment for cash at a cost of $17,500. • At the end of the year, the company issued bonds payable for $10,000 cash. The bonds will mature on December 31, 2017. • The company paid $23,200 in cash dividends for the year.

Problem 13-28

Kate Petusky prepared Addison Controls’ balance sheet and income statement for 2013. Before she could complete the statement of cash flows, she had to leave town to attend to a family emergency. Because the full set of statements must be provided to the auditors today, Addison’s president, Lance Meyers, has asked you to prepare the statement of cash flows. Meyers has provided you with the balance sheet and income statement that Petusky prepared, as well as some notes she made:

Addison Controls
Income Statement
For the Year Ended December 31, 2013 Sales revenue $127,900 Cost of goods sold 69,800   Gross margin 58,100 Selling expense
13,000 Administrative expense 8,000 Salaries expense 20,000 Depreciation expense 1,900 Interest expense 4,000 46,900 Income before gain and taxes 11,200 Gain on sale of land 900 Income tax expense 800   Net income $11,300
Addison Controls
Comparative Balance Sheets
As of December 31 2013 2012 Cash $5,100 $4,300 Accounts receivable, net 6,300 5,500 Inventory 31,700 34,200   Total current assets 43,100 44,000 Property, plant, & equipment, net 211,500 215,300   Total assets $254,600 $259,300 Accounts payable $3,400 $5,900 Accrued expenses 600 700 Salaries payable 1,800 1,500 Taxes payable 2,100 2,600 Bonds payable 60,000 50,000   Total liabilities 67,900 60,700 Common stock 125,000 125,000 Retained earnings 61,700 73,600   Total stockholders’ equity
186,700 198,600 Total liabilities & stockholders' equity $254,600 $259,300
• Equipment with an original cost of $35,000 was sold for $20,300. The book value of the equipment was $19,400. • On June 1, 2013, the company purchased new equipment for cash at a cost of $17,500. • At the end of the year, the company issued bonds payable for $10,000 cash. The bonds will mature on December 31, 2017. • The company paid $23,200 in cash dividends for the year.

Explanation / Answer

a. Collection from customers

= Sales Revenue + Beginning Accounts Receivable - Ending Accounts Receivable

= 127900+5500 - 6300= $127100

b.

Payment to Suppliers = Purchase +Beginning Accounts Payable - Ending Accounts Payable

= 67300 + 5900 -3400 = $69800

Purchase = Cost of goods sold + Ending Inventory - beginning Inventory

=69800 + 31700- 34200 = $ 67300

c.

Payments to employees= Salaries Expenses + beginning salaries payable - ending salaries payable

= 20000+1500-1800= $19700

d.

Payments for operating expenses = (Selling Expenses + Administrative Expenses )+begnning Acrued Expenses - Ending Acrued Expenses = (13000+8000) + 700 -600 = $ 21100

e.

Payments for income taxes = Income tax Expenses + beginning Tax Payable - Ending Tax Payable

= 800 + 2600 - 2100 = $ 1300

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