XS Supply Company is developing its annual financial statements at December 31,
ID: 2498741 • Letter: X
Question
XS Supply Company is developing its annual financial statements at December 31, 2010. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:
2010 2009 Balance Sheet at December 31
Cash $ 35,400 $ 29,400
Accounts Receivable 34,400 30,000
Merchandise Inventory 40,100 36,800
Property and Equipment 123,400 101,000
Less: Accumulated Depreciation (29,900 ) (24,400 )
$ 203,400 $ 172,800
Accounts Payable $ 36,600 $ 26,000
Wages Payable 1,150 1,500
Note Payable, LongTerm 39,000 43,300
Contributed Capital 83,850 75,200
Retained Earnings 42,800 26,800
$ 203,400 $ 172,800
Income Statement for 2010
Sales $ 121,100
Cost of Goods Sold 69,800
Other Expenses 35,300
Net Income $ 16,000
Additional Data:
a. Bought equipment for cash, $22,400.
b. Paid $4,300 on the longterm note payable.
c. Issued new shares of stock for $8,650 cash.
d. No dividends were declared or paid.
e. Other expenses included depreciation, $5,500; wages, $20,700; taxes, $5,700; other, $3,400.
f. Accounts payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.
Required: Prepare the statement of cash flows for the year ended December 31, 2010, using the indirect method. (Amounts to be deducted and negative net cash amount should be indicated with minus sign. Omit the "$" sign in your response.)
Explanation / Answer
For the year ended on December 31, 2010 ($) Cash Flow from Operating Activities $ $ Net Income 16000 Adjustments for: Add: Depreciation 5500 Increase in accounts payable(36600-26000) 10600 Less: Increase in Accounts receivable(34400-30000) -4400 Increase in Merchandise inventory (40100-36800) -3300 Decrease in wages payable (1500 - 1150) -350 8050 Net Cash Flow from Operating Activities 24050 Cash Flow from Investing Activities Purchase of equipments -22400 Cash Flow from financing Activities Repayment of long term notes payable -4300 Issue of new shares 8650 Net Cash Flow from Financing Activities 4350 Cash flow for the year ended on Dec 31, 2010 6000 Add: Beginning Balance of cash 29400 Cash balance as on Dec 31, 2010 35400
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