Problem 23-7 (Part Level Submission) CHAPMAN COMPANY COMPARATIVE BALANCE SHEET A
ID: 2420964 • Letter: P
Question
Problem 23-7 (Part Level Submission)
CHAPMAN COMPANY
COMPARATIVE BALANCE SHEET
AS OF MAY 31
2014
2013
$28,650
$20,420
75,360
58,960
220,740
250,400
9,216
7,500
333,966
337,280
600,140
502,910
150,800
125,990
449,340
376,920
$783,306
$714,200
$123,740
$115,800
47,450
72,960
27,810
25,960
199,000
214,720
70,610
100,660
269,610
315,380
370,200
280,400
143,496
118,420
513,696
398,820
$783,306
$714,200
CHAPMAN COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED MAY 31, 2014
$1,256,210
722,580
533,630
252,890
75,120
24,810
8,690
361,510
172,120
43,510
$128,610
(b)
Prepare a statement of cash flows for Chapman Company for the year ended May 31, 2014, using the direct method. (A reconciliation of net income to net cash provided is not required.) (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Problem 23-7 (Part Level Submission)
Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Chapman as of May 31, 2014, are as follows. The company is preparing its statement of cash flows.CHAPMAN COMPANY
COMPARATIVE BALANCE SHEET
AS OF MAY 31
2014
2013
Current assets Cash$28,650
$20,420
Accounts receivable75,360
58,960
Inventory220,740
250,400
Prepaid expenses9,216
7,500
Total current assets333,966
337,280
Plant assets Plant assets600,140
502,910
Less: Accumulated depreciation—plant assets150,800
125,990
Net plant assets449,340
376,920
Total assets$783,306
$714,200
Current liabilities Accounts payable$123,740
$115,800
Salaries and wages payable47,450
72,960
Interest payable27,810
25,960
Total current liabilities199,000
214,720
Long-term debt Bonds payable70,610
100,660
Total liabilities269,610
315,380
Stockholders’ equity Common stock, $10 par370,200
280,400
Retained earnings143,496
118,420
Total stockholders’ equity513,696
398,820
Total liabilities and stockholders’ equity$783,306
$714,200
CHAPMAN COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED MAY 31, 2014
$1,256,210
Cost of goods sold722,580
Gross profit533,630
Expenses Salaries and wages expense252,890
Interest expense75,120
Depreciation expense24,810
Other expenses8,690
Total expenses361,510
Operating income172,120
Income tax expense43,510
Net income$128,610
The following is additional information concerning Chapman’s transactions during the year ended May 31, 2014.
1. All sales during the year were made on account. 2. All merchandise was purchased on account, comprising the total accounts payable account. 3. Plant assets costing $97,230 were purchased by paying $18,130 in cash and issuing 7,910 shares of stock. 4. The “other expenses” are related to prepaid items. 5. All income taxes incurred during the year were paid during the year. 6. In order to supplement its cash, Chapman issued 1,070 shares of common stock at par value. 7. Cash dividends of $103,534 were declared and paid at the end of the fiscal year.
Explanation / Answer
CHAPMAN COMPANY Statement of Cash Flows Cash flow from operating activities Collections from customers 1239810 Cash Payments Cash paid to suppliers 684980 Cash paid to employees 278400 Cash paid for other expenses 10406 Cash paid for interest 73270 income taxes 43510 1090566 Net cash provided by operating activities 149244 Cash flows from investing activities Purchase of plant assets -18130 Cash flows from financing activities Cash received from common stock issue 10700 Cash paid For dividends 103534 To retire bonds payable 30050 133584 Net cash used by financing activities -122884 Net increase in cash 8230 Cash, June 1, 2013 20420 Cash, May 31, 2014 28650 Collections from customers Sales 1256210 Less: Increase in accounts receivable 16400 Cash collected from customers 1239810 Cash to suppliers: Cost of goods sold 7,22,580 Less Decrease in merchandise inventory 29660 Increase in accounts payable 7940 Cash paid to suppliers 6,84,980 Cash paid to employees Salary Expense 252890 Add: Decrease in salaries payable 25510 Cash paid to employees 278400 Cash paid for other expenses other expenses 8,690 Add: Increase in prepaid expenses 1716 Cash paid for other expenses 10,406 Cash paid for interest interest 75,120 Less: Increase in interest payable 1850 Cash paid for interest 73,270 Cash paid for income taxes income taxes 43,510
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.