Heads Up Company was started several years ago by two hockey instructors. The co
ID: 2590947 • Letter: H
Question
Heads Up Company was started several years ago by two hockey instructors. The company's comparative balance sheets and income statement follow, along with additional information Current Previous Year Year Balance Sheet at December 31 6,140 $ 3,680 Cash Accounts Receivable Equipment 820 1,590 4,6204,200 Accumulated Depreciation-Equipment 1340) (1,170) $10,240 $8,300 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings $ 580 $ 1,000 750 500 4,2004,200 3,1801,850 1,700 $10,240 $ 8,300 Income Statement Service Revenue Salaries and Wages Expense Depreciation Expense Income Tax Expense $41,100 38,600 170 1,000 Net Income $1,330 Additional Data: a. Bought new hockey equipment for cash, $420 b. Borrowed $1,200 cash from the bank during the year c. Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax, assume that this expense was fully paid in cash.Explanation / Answer
Detail
Net
Cash Flows from operating activities
Net profit before tax and dividend
2,330
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation
170
Decrease in Accounts payable
(420)
Decrease in Salaries and wages payable
(170)
Decrease in Accounts receivable
770
Income Tax paid
(1000)
Cash flow from Operating activities (A)
1,680
Cash Flows from Investing activities
Purchase of equipment
(420)
Cash Used in Investing activities (B)
(420)
Cash Flows from Financing activities
Raising of loan
1200
Cash flow from Financing Activities(C)
1200
Net increase in cash (A+B+C)
2,460
Opening Cash
3,680
Closing cash
6,140
Detail
Net
Cash Flows from operating activities
Net profit before tax and dividend
2,330
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation
170
Decrease in Accounts payable
(420)
Decrease in Salaries and wages payable
(170)
Decrease in Accounts receivable
770
Income Tax paid
(1000)
Cash flow from Operating activities (A)
1,680
Cash Flows from Investing activities
Purchase of equipment
(420)
Cash Used in Investing activities (B)
(420)
Cash Flows from Financing activities
Raising of loan
1200
Cash flow from Financing Activities(C)
1200
Net increase in cash (A+B+C)
2,460
Opening Cash
3,680
Closing cash
6,140
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