Problem 23-7 (Part Level Submission) Chapman Company, a major retailer of bicycl
ID: 2421008 • Letter: P
Question
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
$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
The following is additional information concerning Chapman’s transactions during the year ended May 31, 2014.
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
Explanation / Answer
Cash flow from operating activites using indirect method
Net income $128,610
Add:Depreciation expense $24,810
Account paayble increase 7,940
Interest payable 1,850
Inventory decreas 29,660
less:Salriea& wages payable (25,510)
Account receivable increase (16,400)
Prepaid expense increase (1,716) $20,634
Net cash flow from operating activities $149,244
Net income $128,610
Add:Depreciation expense $24,810
Account paayble increase 7,940
Interest payable 1,850
Inventory decreas 29,660
less:Salriea& wages payable (25,510)
Account receivable increase (16,400)
Prepaid expense increase (1,716) $20,634
Net cash flow from operating activities $149,244
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