Helmets purchased equipment for $124,000 cash, sold equipment costing $72, FOR $

Question

Helmets purchased equipment for $124,000 cash, sold equipment costing $72, FOR $38,000 Pinaniclal deta tolion 2010. No new notes payables were isued during the year 10. (20 polnts) Cash Flow Statement 2015 586,000 $3,200 Sales revenue 27,600 34,800 Cost of sales 42,000 14,000 Salaries expense 2016 $1,700,00 850,00 Accounts receivable 62,400 270,00 56,000 36,00 308,000 2,000 Depreciation expense Equipment Accum. depreciation Accounts payable 7,00 6,00 88,00 Interest expense (92,000) (84,000) (8,000) I (22,000) Loss on sale of equipment 32,400 42,400 (10,000) Income taxes expense 14,000 17,600 (3,600) Net income 23,200 Unearned revenue Accrued salaries $.443.0 Taxes payable 16,000 7,200 Long-term notes payable74,000 110,000 (36,000) 180,000 56,000 124,000 101,200 64,800 36,400 Common stock Retained earnings Required: Prepare a Cash Flow Statement using the indirect method for 2016.

Explanation / Answer

workings:

Depreciation:

Acc dep disposed on sale of equipment= Gross block - sale proceeds - loss on sale= 72000-38000-600= 33400

Movement in acc dep:

Statement of cash flow Particulars Amount Amount Net income before taxes                 53,100 Adjustments to reconcile net income: Depreciation                 41,400 Loss on sale of equipment                       600 Working capital changes:                          -   (Increase in) Accounts receivable                (34,800) (Increase in) Inventory                (14,000) (Decrease in) Accrued salaries                  (3,600) (Decrease in) Accounts payable                (22,000) (Decrease in) Unearned revenue                (10,000) Net cash from operations                 10,700 Income taxes paid                  (1,600) Net cash from operating activities                   9,100                 9,100 Cash flow from investing activities: (Cash used in purchase of) Property plant and equipment            (1,24,000) Cash from sale of equipment                 38,000 Net cash (used in) investing activities                (86,000)             (86,000) Cash flow from financing activities: (Cash paid) for dividends                  (7,900) (Cash used in redemption of) Long term notes payable                (36,000) Cash from sale of Common stock              1,24,000 Net cash from financing activities                 80,100               80,100 Net change in cash                 3,200 Add: Opening cash balance               86,000 Closing cash and cash equivalents               89,200

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