The management team of Wickersham Brothers Inc. is preparing its annual financia

Question

The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized. Current Prior Year Balance Sheet Assets Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation $ 91,500 $111,000 120,000 105,000 90,000 97,500 170,000 90,000 48,800) (25,000) Total assets $422,700 $378,500 Liabilities Accounts payable Salaries and Wages Payable Notes payable, long-term s 15,000 S 18,000 1,500 75,00090,000 3,000 Stockholders' Equity: Common stock Retained earnings 140,000120,000 189,700 149,000 Total liabilibes and stockholders' equity $422,700 $378,500 Income Statement Sales Cost of goods sold Depreciation expense Other expenses $400,000 210,000 23,800 100,000 Net income $ 66,200 Other information from the company's records includes the following a Bought equipment for cash, $80,000 b.Paid $15,000 on long-term note payable. c. Issued new shares of common stock for $20,000 cash d Cash dividends of $25,500 were declared and paid to stockholders. e Accounts Payable arose from inventory purchases on credit . Income tax expense (516,550) and interest expense (54,500) were paid in full at the end of both years and are included in Other Expenses Required a. Prepare the statement of cash flows using the indirect method Include any supplemental disclosures (Enter any deductions and cash outllows as a negative value.)

Explanation / Answer

Cash Flow Statement operating Profit            78,250 Income from Operating Activities +Depreciation           23,800 +Interest Expenses             4,500 -Payment of Tax          -16,550 -Increasein A/R          -15,000 -Decrease fo A/P            -3,000 -Decrease in wages payable             1,500          -22,750 Cash from Operating Activities            55,500 Cash from Investing Activities -Purchase of Equipment          -80,000 + sale of Equipment                   -            -80,000 Cash from Financing Activities -Repayment of Long term notes          -15,000 +Issue of Shares           20,000              5,000 Cash from the operation          -19,500 Add: Opening Cash Balance         1,11,000 Closing Cash Balance            91,500 Calculation of Equipment Purchase Beg bal           90,000 Add: Purchase           80,000 Less: Sales                   -   Closing Balance        1,70,000 Calculation of Accumulated Depn Beg bal           25,000 During the year           23,800 Less: Closing Balance          -48,800 Payment of Tax Beg. Balance 0 Add; Prov. During The year 16,550 Less: Closing Balance 0 Tax Paid during the year 16,550 Calculation of Dividend paid Beg. Balance 1,49,000 Add: Net Incomce 66,200 Less: Closing Blaance -1,89,700 Dividend Paid 25,500

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