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.
