60.1K

Verified Solution

Link Copied!

Please show necessary working.

Exercise 2: Cash Flow Statement Ingersol Construction Supply Company is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: Current Year Prior Year Balance sheet at December 31 S 29,000 S 34,000 Cash Accounts receivable 45,000 28,000 Merchandise inventory 32,000 38,000 Property and equipment 121,000 100,000 Less: Accumulated depreciation (25,000) (30,000) $202,000 $170,000 $ 36,000 $ 27,000 Accounts payable 1,400 Wages payable 2,200 Note payable, long-term 40,000 46,000 Contributed capital 70,600 86,600 Retained earnings 37,200 25,000xsxs S 202,000 $ 170,000 Income statement for current year $ 135,000 Sales Cost of goods sold 70,000 Other expenses 37,800 $27,200 Net income Additional Data: a. Bought equipment for cash, $21,000. b. Paid $6,000 on the long-term note payable. c. Issued new shares of stock for $16,000 cash. d. Dividends of $15,000 were declared and paid in cash. e. Other expenses included depreciation, $5,000; wages, $20,000; taxes, $6,000; and other, $6,800. 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 using the indirect method for the year ended December 31, current year. 2. Evaluate the statement of cash flows. 3. Prepare the statement of cash flows (only operating section) using the indirect method for the year ended December 31, current year

Answer & Explanation Solved by verified expert

See Answer