XS Supply Company is developing its annual financial statements at December 31.

Question

XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized Current Year Previous Year Balance Sheet at December 31 Cash Accounts Receivable Inventory Equipment Accumulated Depreciation-Equipment $35,650 S 30,750 29,000 39,000 110,000 (32,000) (26,000) 37,000 43,000 136,000 $219,650 $182,750 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings $38,000 $ 28,000 1,150 54,000 73,600 26,000 850 47,000 94,600 39,200 $219,650 $182,750 Income Statement Sales Revenue Cost of Goods Sold Other Expenses $130,000 75,000 41,800 Net Income $ 13,200 Additional Data a. Bought equipment for cash, $26,000 b. Paid $7,000 on the long-term note payable c. Issued new shares of stock for $21,000 cash d. No dividends were declared or paid e. Other expenses included depreciation, $6,000; Salaries and wages, $21,000; taxes, $7,000; utilities $7,800 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

Explanation / Answer

Statement of Cash Flows For the Year Ended December 31 Cash flows from operating activities: 13200 Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 6000 Increase in accounts receivable -8000 Increase in inventory -4000 Increase in accounts payable 10000 Decrease in wages payable -300 3700 Net cash provided by operating activities 16900 Cash flows from investing activities: Cash payments to purchase equipment -26000 Net cash used by investing activities -26000 Cash flows from financing activities: Cash payments on long-term note -7000 Cash receipts from issuing stock 21000 Net cash provided by financing activities 14000 Net increase in cash during the year 4900 Cash balance, January 1 30750 Cash balance, December 31 35650

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