Using the attached template and the below information, prepare a statement of ca
ID: 2597983 • Letter: U
Question
Using the attached template and the below information, prepare a statement of cash flow. Be sure you address cash flows from operating, financing and investing activities.
You can also follow the indirect method, which is easier to understand for some students. If you get stuck on one, try the other.
Income Statement
For Year Ended December 31, 20X6
Revenue from Sales:
Sales
$570,960
Less Sales Returns and
Allowances
12,960
Net Sales
$558,000
Cost of Goods Sold:
Merchandise Inventory,
January 1, 20X6
$163,200
Purchases
$372,720
Less: Purchases Returns and
Allowances
$6,360
Purchases Discounts
5,520
11,880
Net Purchases
$360,840
Add Freight In
18,360
Delivered Cost of Purchases
379,200
Cost of Goods Available for Sale
$542,400
Less Merchandise Inventory,
December 31, 20X6
170,400
Cost of Goods Sold
372,000
Gross Profit
$186,000
Operating Expenses:
Salary Expense
$ 88,200
Payroll Tax Expense
9,780
Advertising Expense
4,260
Depreciation Expense, Building
14,400
Depreciation Expense, Equipment
8,400
Supplies Expense
1,920
Insurance Expense
1,260
Miscellaneous Expense
840
Total Operating Expenses
129,060
Income from Operations
$ 56,940
Other Income:
Interest Income
$ 840
Other Expenses:
Interest Expense
12,000
11,160
Income Before Income Taxes
$ 45,780
Income Tax Expense
11,880
Net Income
$ 33,900
Evanson Corporation
Statement of Retained Earnings
For Year Ended December 31, 20X6
Retained Earnings
Retained Earnings,
January 1, 20X6
$59,640
Net Income for the Year
33,900
$93,540
Less: Cash Dividends Declared
$15,600
Total Retained Earnings
$77,940
Evanson Corporation
Comparative Balance Sheet
December 31, 20X6 and December 31, 20X5
20X6
20X5
Increase or
(Decrease)
Assets
Cash
$ 29,820
$ 22,020
$ 7,800
Notes Receivable
10,800
( 10,800)
Accounts Receivable (net)
56,700
37,440
19,260
Subscriptions Receivable, Common Stock
28,860
28,860
Merchandise Inventory
170,400
163,200
7,200
Supplies
360
240
120
Prepaid Insurance
180
420
( 240)
Land
37,200
37,200
Building
264,000
264,000
Less Accumulated Depreciation
( 129,600)
( 115,200)
( 14,400)
Equipment
44,400
44,400
Less Accumulated Depreciation
( 25,200)
( 16,800)
( 8,400)
Total Assets
$477,120
$447,720
$29,400
Liabilities
Accounts Payable
$ 35,220
$ 51,360
($16,140)
Salaries Payable
2,520
2,940
( 420)
Income Tax Payable
1,140
840
300
Interest Payable
1,320
1,560
( 240)
Mortgage Payable
129,600
136,800
( 7,200)
Total Liabilities
$169,800
$193,500
($23,700)
Stockholder's Equity
Common Stock
$172,200
$166,800
$ 5,400
Common Stock Subscribed
25,860
25,860
Paid-in Capital in Excess of Par Value
31,320
27,780
3,540
Unappropriated Retained Earnings
47,940
35,640
12,300
Retained Earnings Appropriated for
Plant Expansion
30,000
24,000
6,000
Total Stockholders' Equity
$307,320
$254,220
$53,100
Total Liabilities and Stockholders' Equity
$477,120
$447,720
$29,400
Transactions recorded:
Paid $7,200 on the principal plus $12,000 interest on the mortgage.
Collected note receivable, $10,800, plus $840 interest.
Received subscription for common stock, $34,800, having a par value of $31,260.
Received $5,940 from subscribers of common stock, having a par value of $5,400, and issued the stock.
Revenue from Sales:
Sales
$570,960
Less Sales Returns and
Allowances
12,960
Net Sales
$558,000
Cost of Goods Sold:
Merchandise Inventory,
January 1, 20X6
$163,200
Purchases
$372,720
Less: Purchases Returns and
Allowances
$6,360
Purchases Discounts
5,520
11,880
Net Purchases
$360,840
Add Freight In
18,360
Delivered Cost of Purchases
379,200
Cost of Goods Available for Sale
$542,400
Less Merchandise Inventory,
December 31, 20X6
170,400
Cost of Goods Sold
372,000
Gross Profit
$186,000
Operating Expenses:
Salary Expense
$ 88,200
Payroll Tax Expense
9,780
Advertising Expense
4,260
Depreciation Expense, Building
14,400
Depreciation Expense, Equipment
8,400
Supplies Expense
1,920
Insurance Expense
1,260
Miscellaneous Expense
840
Total Operating Expenses
129,060
Income from Operations
$ 56,940
Other Income:
Interest Income
$ 840
Other Expenses:
Interest Expense
12,000
11,160
Income Before Income Taxes
$ 45,780
Income Tax Expense
11,880
Net Income
$ 33,900
Explanation / Answer
Cash flow statement using Indirect Method Cash flow from Operating activities Net Income $33,900 Depreciation expense [$14400 + $8400] $22,800 Working capital items adjustments : Increase in Accounts Receivables -$19,260 Increase in Merchandise Inventory -$7,200 Increase in supplies -$120 Decrease in Prepaid Insurance $240 Decrease in Accounts Payable -$16,140 Decrease in Salary Payable -$420 Increase in Income tax payable $300 Decrease in Interest payable -$240 -$42,840 Net Cash available from Operating activities $13,860 Cash Flow from Investing activities Collection of note receivables $10,800 Net Cash available from Investing activities $10,800 Cash flow from Financing activities Repayment of Mortgage payable -$7,200 Dividend paid -$15,600 Received against Subscription for Common stock $5,940 Net Cash used for financing activities -$16,860 Net Cash surplus $7,800 Cash balance as on 2005 $22,020 Cash balance as on 2006 $29,820
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