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Mademuasel [1]
3 years ago
7

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 Year Prior Year
Balance Sheet
Assets
Cash $ 78,900 $ 99,300
Accounts Receivable 108,000 94,500
Merchandise Inventory 81,000 87,750
Property and Equipment 152,000 81,000
Less:
Accumulated Depreciation (43,280) (22,000)
Total Assets $ 376,620 $ 340,550
Liabilities:
Accounts Payable $ 13,500 $ 16,200
Salaries and Wages Payable 2,700 1,350
Notes Payable, Long-Term 67,500 81,000
Stockholders’ Equity:
Common Stock 128,000 108,000
Retained Earnings 164,920 134,000
Total Liabilities and Stockholders’ Equity $ 376,620 $ 340,550
Current Year
Income Statement
Sales $ 340,000
Cost of Goods Sold 180,000
Depreciation Expense 21,280
Other Expenses 85,000
Net income $ 53,720
Other information from the company’s records includes the following:
1. Bought equipment for cash, $71,000.
2. Paid $13,500 on long-term note payable.
3. Issued new shares of common stock for $20,000 cash.
4. Cash dividends of $22,800 were declared and paid to stockholders.
5. Accounts Payable arose from inventory purchases on credit.
6. Income Tax Expense ($4,000) and Interest Expense ($3,000) were paid in full at the end of both years and are included in Other Expenses.
Required:
Prepare a schedule summarizing operating, investing, and financing cash flows using the T-account approach.
Business
1 answer:
garik1379 [7]3 years ago
4 0

Answer:

A Schedule Summarizing Operating, Investing, and Financing Cash Flows, using the T-account approach:

                              Operating        Investing         Financing

                         Debit  Credit     Debit    Credit    Debit   Credit

1. Equipment                                          $71,000

2. Note Payable                                                              $13,500

3. Common Stock                                              $20,000

4. Cash Dividends                                                         $22,800

5. Accounts Payable          $2,700

6. Income Tax Expense    $4,000

7. Interest Expense                                                        $3,000

8. Net Income        $53,720

9. Depreciation      $21,280

10. Tax & Interest    $7,000

11. Accts receivable               $13,500

12. Inventory                           $6,750

13. Salaries Payable   $1,350

Total inflows/

outflows                 $83,350 ($26,950)  ($71,000) $20,000 ($39,300)

Net cash from              $56,400              ($71,000)     ($19,300)

Operating activities       $56,400

Investment activities     ($71,000)

Financing activities       ($19,300)

Net cash flows             ($33,900)

Explanation:

a) Data and Calculations:

1.                                                           Current Year   Prior Year

Balance Sheet

Assets

Cash                                                    $ 78,900     $ 99,300

Accounts Receivable                           108,000        94,500

Merchandise Inventory                         81,000        87,750

Property and Equipment                   152,000        81,000

Less:

Accumulated Depreciation             (43,280)     (22,000)

Total Assets                                   $ 376,620  $ 340,550

Liabilities:

Accounts Payable                           $ 13,500     $ 16,200

Salaries and Wages Payable            2,700           1,350

Notes Payable, Long-Term              67,500         81,000

Stockholders’ Equity:

Common Stock                               128,000       108,000

Retained Earnings                          164,920       134,000

Total Liabilities &

Stockholders’ Equity $ 376,620   $ 340,550

2. Current Year  Income Statement

:

Sales                         $ 340,000

Cost of Goods Sold     180,000

Depreciation Expense  21,280

Other Expenses           85,000

Net income               $ 53,720

3. The Wickersham Brothers Inc.'s Statement of Cash Flows is one of the three main financial statements that the management of Wickersham Brothers Inc. must prepare and present to the stockholders of the company and the general public.  It details the Wickersham's cash flows under the operating activities, investing activities, and financing activities sections.

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