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GL1201 (Algo) - Based on Exercise 12-11 LO P2, P3, A1 Use the following financial statements and additional information. 2018 PORTER INCORPORATED Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $ 71,100 Accounts receivable, net 70,000 Inventory 63,000 Prepaid expenses 6,300 Total current assets 210,400 Equipment 205,000 Accumulated depreciation-Equipment (51,000) Total assets $ 364,400 Liabilities and Equity Accounts payable $ 26,000 Wages payable 8,000 Income taxes payable 3,600 Total current liabilities 37,600 Notes payable (long term) 33,000 Total liabilities 70,600 Equity Common stock, $5 par value 240,000 Retained earnings 53,800 Total liabilities and equity $ 364,400 $ 6,100 55,000 88,000 7,900 157,000 190,000 (17,000) $ 330,000 $ 32,000 20,000 4,000 56,000 65,000 121,000 170,000 39,000 $ 330,000 PORTER INCORPORATED Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 93,000 Other expenses 109,000 Total operating expenses $ 1,102,000 674,000 428,000 $ 202,000 $ 1,102,000 674,000 428,000 PORTER INCORPORATED Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 93,000 Other expenses 109,000 Total operating expenses Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income $ 202,000 226,000 8,200 234, 200 71,690 $ 162,510 Additional Information a. A $32,000 note payable is retired at its $32,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $91,000 cash. d. Received cash for the sale of equipment that had cost $76,000. yielding a $8,200 gain. e. Prepaid Expenses and Wages Payable relate to other Expenses on the income statement f. All purchases and sales of inventory are on credit General General Requirement Indirect Trial Balance Direct Method Journal Ledger Method Using the income statement, the comparative balance sheet, and the additional information given above, reconstruct the entries for the summarized activity of the current fiscal year. Upon completion, the trial balance tab should agree with the June 30, 2019 balances. View transaction list No Date View journal entry worksheet Account Title Credit Debit 1 A7 non 1 hinan Cach No Date Account Title Credit 1 June 30 Cash Debit 1,087,000 15,000 Accounts receivable, net Sales 1,102,000 2 June 30 6,000 674,000 Accounts payable Cost of goods sold Inventory Cash 25,000 655,000 3 June 30 93,000 Depreciation expense Accumulated depreciation - Equipment 93,000 4 June 30 109,000 12,000 Other expenses Wages payable Prepaid expenses Cash 1,600 119,400 5 June 30 64,900 59,000 Cash Accumulated depreciation - Equipment Gain on sale of equipment Equipment 8,200 74,000 6 June 30 Income taxes expense 71,690 400 Income taxes payable Cash 72,090 7 June 30 32,000 Notes payable (long-term) Cash 32,000 8 June 30 Equipment Cash 91,000 91,000 9 June 30 70,000 Cash Common stock, $5 par value 70,000 10 June 30 Sales Gain on sale of equipment Income summary 1,102,000 8,200 1,110,200 11 June 30 947,690 Income summary Cost of goods sold Depreciation expense Other expenses Income taxes expense 674,000 93,000 109,000 71,690 12 June 30 162,510 Income summary Retained earnings 162,510 13 June 30 471,710 Retained earnings Cash 471,710 Post-closing PORTER INCORPORATED Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities: Cash received from customers $ 1,087,000 Cash paid for merchandise Cash paid for operating expenses Cash paid for income taxes $ 1,087,000 Net cash provided by operating activities Cash flows from investing activities: Cash received from sale of equipment Cash paid for equipment Net cash used by investing activities Cash flows from financing activities: Cash received from stock issuance Cash paid for dividends Cash paid to retire notes Net cash used by financing activities Requirement General Journal General Ledger Trial Balance Direct Method Indirect Method Prepare the operating activities section of the statement of cash flows using the indirect method. Enter reductions to net cash provided by operating activities as negative values. Post-closing PORTER INCORPORATED Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 Cash flows from operating activities: Net income 162,510 Adjustments to reconcile net income to net cash provided by operating activities: Income statement items not affecting cash Gain on sale of equipment $ (8,200) Depreciation expense 93,000 0 Changes in current operating assets and liabilities Increase in accounts receivable Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income taxes payable (15,000) 25,000 1,600 (6.000) (12,000) (400) 0 Net cash provided by operating activities Net cash provided by operating activities, using the direct method 78,000 $ 240,510 $ 1,087,000 Prev 1 of 1 !!! Next

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