Use thd following finanacial statements and additional information to (1) prepar
ID: 2458391 • Letter: U
Question
Use thd following finanacial statements and additional information to (1) prepare a statement of cash flows for the year ended Dec 31,2011 using the indirect method, and (2) compute the company's cahs flow on total assets ratio for 2011.
Wescott Company Balance Sheets At Dec 31
Assets: 2011 2010
cash.................................................... $ 85,600 $ 65,200
accounts receivable, net........................ 72,850 56,750
merchandise inventory........................... 157,750 144,850
prepaid expenses ................................ 6,080 12,680
equipment........................................... 280,600 245,000
accumulated depreciation-equipment..... (80,600) (97,600)
total assets......................................... $522,280 $427,480
Liabilities:
Accounts payable............................... $ 52,850 $ 45,450
Income taxes payable......................... 15,240 12,240
Ntoe payable (long term)..................... 59,200 79,200
Total liabilities.................................... $127,290 $136,890
Equity:
Common stock.................................. $ 200,000 $150,000
Contributed capital in excess of par..... 53,000 40,000
Retained earnings.............................. 141,990 100,590
Total equity........................................ $349,990 290,590
Total liabilities and equity................... $522,280 $427,480
Westcott Comapny Income Statement For Year Ended Dec 31 2011
Sales................................................ $488,000
Cost of goods sold............................. $212,540
Depreciation expense......................... 43,000
Other operating expenses................... 106,260
Interest expense................................ 6,400 (368,200)
Other gains (losses):
Gain on sale of equipment................ 4,700
Income before taxes........................... 124,500
Income taxes expense........................ 41,100
Net income........................................ $83,400
Additional Information
a. A $20,000 note payable is retired at its carrying value in exchange for cash.
b. The only changes affecting retained earnings are net income and cash dividends paid.
c. New equipment is acquired for $120,000 cash.
d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700.
e. Prepaid expenses relate to Other Expenses on the income statement.
f. All purchases and sales of merchandise inventory are on credit.
Explanation / Answer
Use thd following finanacial statements and additional information to (1) prepar
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