P12-5 (Supplement B) Preparing a Statement of Cash Flows with Gain on Sale of Eq
ID: 2655436 • Letter: P
Question
P12-5 (Supplement B) Preparing a Statement of Cash Flows with Gain on Sale of Equipment (Indirect Method) LO12-2, 12-4, 12-6 XS Supply Company is developing its annual financial statements at December 31, 2014. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: 2014 2013 Balance sheet at December 31 Cash $ 34,000 $ 29,000 Accounts receivable 35,000 28,000 Merchandise inventory 41,000 38,000 Property and equipment 121,000 100,000 Less: Accumulated depreciation (30,000) (25,000) $ 201,000 $ 170,000 Accounts payable $ 36,000 $ 27,000 Wages payable 1,200 1,400 Note payable, long-term 38,000 44,000 Contributed capital 88,600 72,600 Retained earnings 37,200 25,000 $ 201,000 $ 170,000 Income statement for 2014 Sales $ 120,000 Gain on sale of equipment 1,000 Cost of goods sold 70,000 Other expenses 38,800 Net income $ 12,200 Additional Data: a. Bought equipment for cash, $31,000. Sold equipment with original cost of $10,000, accumulated depreciation of $7,000, for $4,000 cash. b. Paid $6,000 on the long-term note payable. c. Issued new shares of stock for $16,000 cash. d. No dividends were declared or paid. e. Other expenses included depreciation, $12,000; wages, $13,000; taxes, $6,000; and other, $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. Required: 1 Prepare the statement of cash flows for the year ended December 31, 2014, using the indirect method. (List cash outflows as negative amounts.) Possible input areas are shaded. XS SUPPLY COMPANY Statement of Cash Flows For the Year Ended December 31, 2014 Cash flows from operating activities: Adjustments to reconcile net income to net cash provided by operating activities: - Net cash provided by operating activities - Cash flows from investing activities: - Cash flows from financing activities: - $ - P12-5 (Supplement B) Preparing a Statement of Cash Flows with Gain on Sale of Equipment (Indirect Method) LO12-2, 12-4, 12-6 XS Supply Company is developing its annual financial statements at December 31, 2014. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: 2014 2013 Balance sheet at December 31 Cash $ 34,000 $ 29,000 Accounts receivable 35,000 28,000 Merchandise inventory 41,000 38,000 Property and equipment 121,000 100,000 Less: Accumulated depreciation (30,000) (25,000) $ 201,000 $ 170,000 Accounts payable $ 36,000 $ 27,000 Wages payable 1,200 1,400 Note payable, long-term 38,000 44,000 Contributed capital 88,600 72,600 Retained earnings 37,200 25,000 $ 201,000 $ 170,000 Income statement for 2014 Sales $ 120,000 Gain on sale of equipment 1,000 Cost of goods sold 70,000 Other expenses 38,800 Net income $ 12,200 Additional Data: a. Bought equipment for cash, $31,000. Sold equipment with original cost of $10,000, accumulated depreciation of $7,000, for $4,000 cash. b. Paid $6,000 on the long-term note payable. c. Issued new shares of stock for $16,000 cash. d. No dividends were declared or paid. e. Other expenses included depreciation, $12,000; wages, $13,000; taxes, $6,000; and other, $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. Required: 1 Prepare the statement of cash flows for the year ended December 31, 2014, using the indirect method. (List cash outflows as negative amounts.) Possible input areas are shaded. XS SUPPLY COMPANY Statement of Cash Flows For the Year Ended December 31, 2014 Cash flows from operating activities: Adjustments to reconcile net income to net cash provided by operating activities: - Net cash provided by operating activities - Cash flows from investing activities: - Cash flows from financing activities: - $ -Explanation / Answer
Cash Flow Statement Particulars Amount Net Profit as per profit and loss account 12200 Add: Non Cash Expense Deprecaition 12000 Less Profit on sale of equipment 1000 Add: Decrease in current assets / Increase in current liabilities Accounts payable 9000 Less: Increase in current assets / Decrease in current liabilities Accounts receivable 7000 Inventory 3000 Wages payable 200 Net Cash flow from operating activities (A) 22000 Cash Flow from investing activities Bought equipment 31000 Sold equipment 4000 Net cash flow from Investing activities (B) -27000 Cash flow from financing activities Paid long term note payable 6000 Issued shares for cash 16000 Net cash flow from financing activities © 10000 Net cash flow (A)+(B)+© 5000 Opening cash and cash equivalents 29000 Closing cash and cash equivalents 34000
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