SOFT TOUCH COMPANY Statement of Cash Flows For the Year Ended December 31 Cash Flows from Operating Activities: Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Cash Flows from Investing Activities: Cash Flows from Financing Activities:
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Soft Touch Company was started several years ago by two golf instructors. The companyâs comparative balance sheets and income statement are presented below, along with additional information.
Current
Year Previous Year Balance Sheet at December 31 Cash $ 13,740 $ 8,250 Accounts Receivable 2,400 3,600 Equipment 12,100 11,000 Accumulated DepreciationâEquipment (3,110 ) (2,600 ) $ 25,130 $ 20,250 Accounts Payable $ 1,100 $ 2,100 Salaries and Wages Payable 1,040 1,550 Note Payable (long-term) 3,100 1,000 Common Stock 11,000 11,000 Retained Earnings 8,890 4,600 $ 25,130 $ 20,250 Income Statement Service Revenue $ 75,400 Salaries and Wages Expense 68,500 Depreciation Expense 510 Income Tax Expense 2,100 Net Income $ 4,290
Additional Data:
a. Bought new golf clubs using cash, $1,100. b. Borrowed $2,100 cash from the bank during the year. c. Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax, assume that Income Tax Expense was fully paid in cash.
Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
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Soft Touch Company was started several years ago by two golf instructors. The companyâs comparative balance sheets and income statement are presented below, along with additional information.
| Current Year | Previous Year | |||||
| Balance Sheet at December 31 | ||||||
| Cash | $ | 13,740 | $ | 8,250 | ||
| Accounts Receivable | 2,400 | 3,600 | ||||
| Equipment | 12,100 | 11,000 | ||||
| Accumulated DepreciationâEquipment | (3,110 | ) | (2,600 | ) | ||
| $ | 25,130 | $ | 20,250 | |||
| Accounts Payable | $ | 1,100 | $ | 2,100 | ||
| Salaries and Wages Payable | 1,040 | 1,550 | ||||
| Note Payable (long-term) | 3,100 | 1,000 | ||||
| Common Stock | 11,000 | 11,000 | ||||
| Retained Earnings | 8,890 | 4,600 | ||||
| $ | 25,130 | $ | 20,250 | |||
| Income Statement | ||||||
| Service Revenue | $ | 75,400 | ||||
| Salaries and Wages Expense | 68,500 | |||||
| Depreciation Expense | 510 | |||||
| Income Tax Expense | 2,100 | |||||
| Net Income | $ | 4,290 | ||||
| Additional Data: |
| a. | Bought new golf clubs using cash, $1,100. |
| b. | Borrowed $2,100 cash from the bank during the year. |
| c. | Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax, assume that Income Tax Expense was fully paid in cash. |
| Required: | |
| 1. | Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) |
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Hunter Company is developing its annual financial statements at December 31, 2015. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:
| 2015 | 2014 | |||||
| Balance Sheet at December 31 | ||||||
| Cash | $ | 51,740 | $ | 21,000 | ||
| Accounts Receivable | 32,400 | 35,000 | ||||
| Inventory | 35,400 | 42,000 | ||||
| Equipment | 117,600 | 108,000 | ||||
| Accumulated DepreciationâEquipment | (39,600 | ) | (33,000 | ) | ||
| $ | 197,540 | $ | 173,000 | |||
| Accounts Payable | $ | 28,600 | $ | 25,000 | ||
| Salaries and Wages Payable | 740 | 1,000 | ||||
| Note Payable (long-term) | 44,000 | 54,000 | ||||
| Common Stock | 89,000 | 66,000 | ||||
| Retained Earnings | 35,200 | 27,000 | ||||
| $ | 197,540 | $ | 173,000 | |||
| Income Statement for 2015 | ||||||
| Sales Revenue | $ | 106,000 | ||||
| Cost of Goods Sold | 64,000 | |||||
| Other Expenses | 29,400 | |||||
| Net Income | $ | 12,600 | ||||
| Additional Data: | |
| a. | Bought equipment for cash, $9,600. |
| b. | Paid $10,000 on the long-term note payable. |
| c. | Issued new shares of stock for $23,000 cash. |
| d. | Declared and paid a $4,400 cash dividend. |
| e. | Other expenses included depreciation, $6,600; salaries and wages, $10,600; taxes, $3,600; utilities, $8,600. |
| 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, 2015, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) |
The balance sheet for Plasma Screens Corporation along with additional information, are provided below:
| PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017 | ||||
| 2018 | 2017 | |||
| Assets: | ||||
| Current assets: | ||||
| Cash | $ | 82,000 | $ | 120,000 |
| Accounts receivable | 72,000 | 96,000 | ||
| Inventory | 65,000 | 80,000 | ||
| Prepaid rent | 5,000 | 4,000 | ||
| Long-term assets: | ||||
| Land | 500,000 | 500,000 | ||
| Equipment | 800,000 | 600,000 | ||
| Accumulated depreciation | (380,000) | (300,000) | ||
| Total assets | $ | 1,144,000 | $ | 1,100,000 |
| Liabilities and Stockholders' Equity: | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 78,000 | $ | 82,000 |
| Interest payable | 5,000 | 9,000 | ||
| Income tax payable | 9,000 | 7,000 | ||
| Long-term liabilities: | ||||
| Notes payable | 75,000 | 150,000 | ||
| Stockholders' equity: | ||||
| Common stock | 600,000 | 600,000 | ||
| Retained earnings | 377,000 | 252,000 | ||
| Total liabilities and stockholders' equity | $ | 1,144,000 | $ | 1,100,000 |
Additional Information for 2018:
1. Net income is $160,000.
2. The company purchases $200,000 in equipment.
3. Depreciation expense is $80,000.
4. The company repays $75,000 in notes payable.
5. The company declares and pays a cash dividend of $35,000.
Prepare the statement of cash flows using the indirect method.
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