Wizard company had available at the end of 2015 the information below: 2015 2014
ID: 2485991 • Letter: W
Question
Wizard company had available at the end of 2015 the information below:
2015
2014
Cash
20,000
12,000
Short term investment
31,500
40,000
Inventory
95,600
90,000
Prepaid expenses
15,600
26,000
Land
200,000
260,000
Buildings
650,000
650,000
Accumulated depreciation- buildings
(75000)
(57000)
Equipment
346,000
150,000
Accumulated depreciation- equipment
(41,000)
(60,000)
Patents
68,000
72,000
Total asset
1,310,700
1,183,000
Accounts payable
81,000
86,900
Income taxes payable
26,800
21,000
Salaries and wages payable
0
8,000
Notes payable, short –term
25,000
25,000
Long-term notes payable
50,000
75,000
Bonds payable
600,000
600,000
Discount on bonds payable
(36,015)
(40,865)
Common stock
298,600
206,000
Retained earnings (2015 dividends =40,000)
265,315
201,965
Total liabilities
1,310,700
1,183,000
Income statement and dividends information for the year ended December 31, 2015:
Sales revenue
1,560,000
COGS
976,000
Gross margin
584,000
Operating expenses:
Selling expense
160,800
Administrative expense
116,100
Depreciation/Amortization expense
63000
Total operating expense
339,900
Income from operation
244,100
Other revenues/expenses:
Gain on sale of land
21,000
Loss on sale of short term investment
(8000)
Dividend revenue
4,100
Interest expense
(95,350)
(78,250)
Income before taxes
165,850
Income tax expense
62,500
Net income
103,350
Required:- Prepare a statement of cash flows for Wizard Cpmpany using the direct method. Prepare sepreatly the statement cash flow using indirect method. Assume the short term investments are classfied as available for sale.
2015
2014
Cash
20,000
12,000
Short term investment
31,500
40,000
Inventory
95,600
90,000
Prepaid expenses
15,600
26,000
Land
200,000
260,000
Buildings
650,000
650,000
Accumulated depreciation- buildings
(75000)
(57000)
Equipment
346,000
150,000
Accumulated depreciation- equipment
(41,000)
(60,000)
Patents
68,000
72,000
Total asset
1,310,700
1,183,000
Explanation / Answer
Answer:
Wizard Company Statement of cash Flow Cash flow from operating activities: Net income 103350 Adjustment: Depreciation/Amortization expense 63000 Gain on sale of land -21000 Loss of sale of short-term investment 8000 Dividend Revenue -4100 Increase in inventory -5600 Decrease in prepaid expenses 10400 Decrease in accounts payable -5900 Increase in income tax payable 5800 Increase in accounts receivable -59900 Decrease in salary and wages payable -8000 Decrease in discount on bonds payable 4850 Net cash flow from operating activities 90900 Investing activities: Sale of land 81000 Sale of short tem investment 500 Purchase of equipment -196000 Sale of patents 4000 Net cash flow from investing activities -110500 Financing activities Redemption long term notes payable -25000 Issue of common stock 92600 Dividend paid -40000 Net cash flow from financing avtivities 27600 Net increase or dec in cash 8000 Add: opening cash 12000 Closing cash 20000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.