Balance sheets for Plasma Screens Corporation along with additional information
ID: 2495064 • Letter: B
Question
Balance sheets for Plasma Screens Corporation along with additional information are provided below:
Plasma Screens Corporation
Balance Sheets
December 31, 2012 and 2011
2012
2011
Assets
Current assets:
Cash
$ 82,000
$ 120,000
Accounts receivable
72,000
96,000
Inventory
65,000
80,000
Prepaid rent
5,000
4,000
Long-term assets:
Land
500,000
500,000
Equipment
800,000
600,000
Accumulated depreciation
(380,000)
(300,000)
Total assets
$1,144,000
$1,100,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$ 78,000
$ 82,000
Interest payable
5,000
9,000
Income tax payable
9,000
7,000
Long-term liabilities:
Notes payable
75,000
150,000
Stockholders’ equity:
Common stock
600,000
600,000
Retained earnings
377,000
252,000
Total liabilities and stockholders’ equity
$1,144,000
$1,100,000
Additional Information for 2012:
1. Net income is $160,000.
2. Depreciation expense is $80,000.
3. The company declares and pays a cash dividend of $35,000.
4. Assume all changes in long term assets and liabilities were the result of cash transactions.
Required:
Prepare the statement of cash flows using the indirect method.
2012
2011
Assets
Current assets:
Cash
$ 82,000
$ 120,000
Accounts receivable
72,000
96,000
Inventory
65,000
80,000
Prepaid rent
5,000
4,000
Long-term assets:
Land
500,000
500,000
Equipment
800,000
600,000
Accumulated depreciation
(380,000)
(300,000)
Total assets
$1,144,000
$1,100,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$ 78,000
$ 82,000
Interest payable
5,000
9,000
Income tax payable
9,000
7,000
Long-term liabilities:
Notes payable
75,000
150,000
Stockholders’ equity:
Common stock
600,000
600,000
Retained earnings
377,000
252,000
Total liabilities and stockholders’ equity
$1,144,000
$1,100,000
Explanation / Answer
Plasma Screens Corporation Cash Flow Statement for the year ended 31 December 2012 (All values in $) Net Cash Flows from Operating Activities Net Income for the year 160000 Add : Depreciation Charge for the year 80000 Cash Flows before Working Capital changes 240000 Add : Decrease in Accounts Receivable 24000 Add : Decrease in Inventory 15000 Less : Increase in Prepaid Rent -1000 Less : Decrease in Accounts Payable -4000 Less : Decrease in Interest Payable -4000 Add : Increase in Income Tax Payable 2000 32000 Net Cash Inflows from Operating Activities 272000 Net Cash Flows from Investing Activities Purchase of Fixed Assets -200000 Net Cash Flows from Financing Activities Long Term Notes paid during the year -75000 Dividends Paid -35000 -110000 Net Cash Outflows during the year -38000 Opening Cash and Bank Balance 120000 Closing Cash and Bank Balance as on 31 December 2012 82000
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