Harry\'s Hiccup Remedys Statement of Income For the year Ended January 31, 2005
ID: 2467594 • Letter: H
Question
Harry's Hiccup Remedys
Statement of Income
For the year Ended January 31, 2005
Revenue and Gains:
Total revenue 400
Gain on sale of plant Assets 15
Operating Expenses: 415
Cost of Goods sold 120
Salaries 50
Depreciation 10
Advertising 15
Total operating Expenses 195
Operating Income 220
Other Expenses:
Interest 7
Income Tax 70
Net Income 143
Harry's Hiccup Remedys
Balance Sheet
January 31, 2005 and January 31, 2004
Assets: 31-Jan-05 31-Jan-04
Cash 87 64
Accounts receivable 17 23
Inventory 15 20
Prepaid advertising expenses 7 4
Available-for-sale investments (long-term) 59 60
Plant assets 45 30
Accumulated depreciation -17 -11
Total Assets $ 213 $190
Liabilities and Equity
Account payable 18 10
Accrued salaries payable 4 2
Interest payable 1 2
Income tax payable 5 1
Bonds payable 85 70
Common stock ($2 par value) 40 40
Paid-In-capital excess over Par-Common Stock 10 10
Retained Earnings 50 55
Total Liabilities and Equity $213 $190
Additional Info
Market value of a share of Stock is $50 as of 1/31/05
Plant Assets which were sold during the year had an original cost of $8.
Instructions
Prepare a statement of Cash flows (using the indirect method to present the operating activities.)
Now, use the direct method to show operating activities.
Explanation / Answer
Harry's Hiccup Remedys Cash Flow statement for the period ending Jan 31 2005 Amt $ Opearting Income 220 Less : Capital gain (15) Add Depreciation 10 Less Interest paid (8) (expense +change in payables) Less Tax paid (66) (expense +change in payables) Change in Working Capital Decrease in AR 6 Decrease in Inventory 5 Increase in Prepaid (3) Increase in AP 8 Increase in Salary payable 2 Net Cash Flow from Opearating Activities 159 Cash Flow from Investing Activities Purchase of new Fixed assets (23) Sales proceeds asset disposal 19 sale of long term investment 1 Net Cash Flow from Investing Activities (3) Cash Flow from Financing Activities Issue of Bonds 15 Dividends paid (148) Net Cash Flow from Financing Activities (133) Net Cash Flows from Opearting, Investing And Financing activities 23 Cash balance beginning 64 Add change in cash flow 23 Cash balance balance ending 87 Fixed asset details Asset disposed Book Value 8 Depreciation opening 11 Depreciation closing 17 Yearly depreciation 10 Debit to accumulated depreciation due to asset sales 4 Gain in Asset sale 15 Book Value of asset sold=8-4= 4 Sales peroceeds from asset sold 19 Gross Value Assets beginnng 30 Gross value asset sold 8 Gross value closing 45 New assets purchased 23 Direct Method Operating Cash Flow Cash flow from Sales 406 Sales rev+change in AR Cash Payment purchases (107) COGS +change in AP & Inv Cash payment other opearting expense (66) Cash operating expense+change in sal pybl & prepaid Less Interest paid (8) Less Tax paid (66) Cash Flow from Oprating activities 159
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