Financial data of Fancy Footwork Company for 2013 and 2012 are presented below.
ID: 2349284 • Letter: F
Question
Financial data of Fancy Footwork Company for 2013 and 2012 are presented below.FANCY FOOTWORK COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2013 AND 2012
2013 2012
Cash $ 260,000 $ 230,000
Receivables $ 156,000 $ 120,000
Inventory $ 180,000 $ 220,000
Plant assets $ 160,000 $ 135,000
Accumulated depreciation $ (80,000) $ (76,000)
Long-term investments (held-to-maturity) $ 80,000 $ 93,000
$ 756,000 $ 722,000
Accounts payable $ 135,000 $ 122,000
Accrued liabilities $ 30,000 $ 33,100
Bonds payable $ 135,000 $ 166,000
Common stock $ 180,000 $ 165,000
Retained earnings $ 276,000 $ 235,900
$ 756,000 $ 722,000
FANCY FOOTWORK COMPANY
INCOME STATEMENT
For the year ended Dec 31, 2013
Sales 750000
Cost of Goods Sold 530000
Gross Margin 220000
Selling and administrative expenses 106000
Income from Operations 114000
Other revenues and gains
Gain on sale of investments 7000
Income before tax 121000
Income tax expense 48400
Net Income 72600
Additional information:
During the year, $9000 of common stock was issued in exchange for plant assets. No plant assets were sold in 2012. Cash dividends were $32500.
Required:
A) Prepare a statement of cash flows using the indirect method
B) Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule.)
Explanation / Answer
Statement of cash flows (indirect method)
Cash flows from operating activities
Net income
72,600
adjustments to net income
depreciation
4,000
Gan on sale of investments
-7,000
Increase in AR
-36,000
Decrease in inventory
40,000
Increased in Accounts payable
13,000
Decrease in Accrued liabilities
-3,100
net cash provided by operating activities
83,500
Cash flows from investing activities
Purchase of Plant assets
-16,000
Sale of long-term investments
20,000
net cash provided by investing activities
4,000
Cash flows from financing activities
retiement of bonds
-31,000
payment of dividend
-32,500
sale of common stock
6,000
net cash provided by financing activities
-57,500
net increase in cash
30,000
Cash balance, beginning
230,000
cash balance, ending
260,000
Statement of Cash flows (direct method)
Cash flows from operating activities
cash received from customers
714,000
(sales - increase in AR)
cash paid for merchandise
477,000
(cogs - decrease in invnetory - increase in AP)
cash paid for other operating expenes
105,100
(selling & admin exp + decrease in accrued liab - depreciation)
cash paid for income taxes
48,400
net cash provided b oeprating activities
83,500
Cash flows from investing activities
Purchase of Plant assets
-16,000
Sale of long-term investments
20,000
net cash provided by investing activities
4,000
Cash flows from financing activities
retiement of bonds
-31,000
payment of dividend
-32,500
sale of common stock
6,000
net cash provided by financing activities
-57,500
net increase in cash
30,000
Cash balance, beginning
230,000
cash balance, ending
260,000
Statement of cash flows (indirect method)
Cash flows from operating activities
Net income
72,600
adjustments to net income
depreciation
4,000
Gan on sale of investments
-7,000
Increase in AR
-36,000
Decrease in inventory
40,000
Increased in Accounts payable
13,000
Decrease in Accrued liabilities
-3,100
net cash provided by operating activities
83,500
Cash flows from investing activities
Purchase of Plant assets
-16,000
Sale of long-term investments
20,000
net cash provided by investing activities
4,000
Cash flows from financing activities
retiement of bonds
-31,000
payment of dividend
-32,500
sale of common stock
6,000
net cash provided by financing activities
-57,500
net increase in cash
30,000
Cash balance, beginning
230,000
cash balance, ending
260,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.