Heads Up Company was started several years ago by two hockey instructors. The co
ID: 2438143 • Letter: H
Question
Heads Up Company was started several years ago by two hockey instructors. The company's comparative balance sheets and income statement follow, along with additional information Current Previous Year Year Balance Sheet at December 31 Cash Accounts Receivable Equipment Accumulated Depreciation Equipment S 6,240 S4,520 1,910 5,800 1,330 S 12,100 S 10,900 S 620 S 1,200 750 500 5,800 3,66000 S 12,100 S 10,900 980 6,460 1,580 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings 420 1,600 5,800 Income Statement Sales Revenue Salaries and Wages Expense Depreciation Expense Loss on Disposal of Equipment Income Tax Expense Net Income S 39,100 S 36,600 580 630 280 S 1,010 Additional Data a. Bought new equipment for $2,200 cash and sold existing equipment for $580 cash. The equipment that was sold had cost $1,540 and had Accumulated Depreciation of S330 at the time of sale b. Borrowed $1,100 cash from the bank during the year C. Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax, assume that this expense was fully paid in cash.Explanation / Answer
HEADSUP COMPANY
Statement of cash flows
For the year ended December 31
Cash flows from operating activities
Net income
$ 1,010.00
Adjustments to net income to net cash provided by operating acivities
Depreciation expense
$ 580.00
Loss on sale of equipment
$ 630.00
Decrease in accounts receivable
$ 930.00
Decrease in accounts payable
-$ 580.00
Decrease in salaries and wages payable
-$ 330.00
$ 1,230.00
Net cash provided by operating activities
$ 2,240.00
Cash flows from investing activities
Purchase of equipment
-$ 2,200.00
Sale of equipment
$ 580.00
Net cash used in investing activities
-$ 1,620.00
Cash flows from financing activities
Cash borrowed from bank
$ 1,100.00
Net cash provided by financing activities
$ 1,100.00
Net increase or decrease in cash and cash equivalents
$ 1,720.00
Beginning cash and cash equivalents
$ 4,520.00
Ending cash and cash equivalents
$ 6,240.00
HEADSUP COMPANY
Statement of cash flows
For the year ended December 31
Cash flows from operating activities
Net income
$ 1,010.00
Adjustments to net income to net cash provided by operating acivities
Depreciation expense
$ 580.00
Loss on sale of equipment
$ 630.00
Decrease in accounts receivable
$ 930.00
Decrease in accounts payable
-$ 580.00
Decrease in salaries and wages payable
-$ 330.00
$ 1,230.00
Net cash provided by operating activities
$ 2,240.00
Cash flows from investing activities
Purchase of equipment
-$ 2,200.00
Sale of equipment
$ 580.00
Net cash used in investing activities
-$ 1,620.00
Cash flows from financing activities
Cash borrowed from bank
$ 1,100.00
Net cash provided by financing activities
$ 1,100.00
Net increase or decrease in cash and cash equivalents
$ 1,720.00
Beginning cash and cash equivalents
$ 4,520.00
Ending cash and cash equivalents
$ 6,240.00
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