Comparative balance sheets for 2013 and 2014 and an income statement for 2014 ar
ID: 2477778 • Letter: C
Question
Comparative balance sheets for 2013 and 2014 and an income statement for 2014 are provided below for A2Z Industries. Additional information from the accounting records of A2A is also provided.
A2Z Industries
Comparative Balance Sheets
December 31, 2014 and 2013 ($ in 000)
2014
2013
Assets:
Cash
$1,800
$1,125
Accounts receivable
1,800
1,350
Inventory
2,700
1,575
Available for sale securities, at FMV
500
400
Land
2,025
1,800
Building
2,700
2,700
Less: Acc. Depreciation
(900)
(810)
Equipment
8,550
6,750
Less: Acc. Depreciation
(1,575)
(1,440)
Patent
3,600
4,500
$20,700
$17,550
Liabilties:
Accounts payable
$2,250
$1,350
Accrued expenses payable
900
675
Lease liability—land
450
0
Stockholders’ Equity:
Common Stock
9,450
9,000
PIC in excess of pa
2,250
2,025
Retained earnings
5,400
4,500
Accumulated other comprehensive income
100
0
$20,700
$17,550
A2Z Industries
Income Statement
For the year ended December 31, 2014 ($ in 000)
Revenues:
Sales revenue
$7,935
Gain on sale of land
270
Total Revenues
$8,205
Expenses:
Cost of goods sold
$1,800
Depreciation expense—building
90
Depreciation expense—equipment
945
Loss on sale of equipment
45
Amortization of patent
900
Operating expenses
1,500
Total expenses
5,280
Net income
$2,925
Additional information:
a. The AFSS were purchased on December 31, 2013. There were no additional purchases or sales of AFSS during 2014.
b. During 2014, equipment with a cost of $900 (90% depreciated) was sold.
c. The Statement of Shareholders’ Equity reveals reductions of $675 and $1,350 for stock dividends and cash dividends, respectively.
Required:
Prepare the Statement of Cash Flows of A2Z for the year ended December 31, 2014. Use the indirect method.
A2Z Industries
Comparative Balance Sheets
December 31, 2014 and 2013 ($ in 000)
2014
2013
Assets:
Cash
$1,800
$1,125
Accounts receivable
1,800
1,350
Inventory
2,700
1,575
Available for sale securities, at FMV
500
400
Land
2,025
1,800
Building
2,700
2,700
Less: Acc. Depreciation
(900)
(810)
Equipment
8,550
6,750
Less: Acc. Depreciation
(1,575)
(1,440)
Patent
3,600
4,500
$20,700
$17,550
Liabilties:
Accounts payable
$2,250
$1,350
Accrued expenses payable
900
675
Lease liability—land
450
0
Stockholders’ Equity:
Common Stock
9,450
9,000
PIC in excess of pa
2,250
2,025
Retained earnings
5,400
4,500
Accumulated other comprehensive income
100
0
$20,700
$17,550
Explanation / Answer
A2Z Industries Statement of Cash Flows (Indirect Method) For the Year ended Dec 31, 2014 Cash Flow from opearating activities: Net Income 2,925 Add/(Less) non cash effects on operating activities Depreciation expense - Building 90 Depreciation expense - Equipment 945 Loss on Sale of Equipment 45 Amortization of Patent 900 Gain on sale of Land (270) Increase in Accounts Receivables (450) Increase in Inventory (1,125) Increase in Accounts Payables 900 Increase in Accrued Expenses Payable 225 1,260 Net Cash provided by operating activities 4,185 Cash flow from Investing Activities Purchase of Land Purchase of Equipment (2,700) Sale of Equipment 45 Sale of Land 495 Cash Flow / (used) from Investing activities (2,160) Cash Flow from Financing Activities Cash dividend paid (1,350) Cash Flow from Financing Activities (1,350) Net Increase / (Decrease) in Cash 675 Cash balance at the beginning 1,125 Cash balance at the end 1,800 Equipment Account To Balance b/f 6,750 By Accumulated Dep 810 To Cash (Bal Fig) 2,700 By Cash 45 By Loss on Sale of Equipment 45 By Balance C/f 8,550 9,450 9,450 Accumulated Depreciation - Equipment To Equipment 810 By Balance b/f 1,440 By Dep. 945 To Balance c/f 1,575 2,385 2,385 Land A/c To Balance b/f 1,800 By Cash (Bal. Fig.) 495 To Gain on sale of Land 270 By Balance C/f 2,025 To leased Liability 450 2,520 2,520
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