90.2K

Verified Solution

Link Copied!

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	$	83,100			$	103,200
Accounts receivable		112,000				98,000
Merchandise inventory		84,000				91,000
Property and equipment		158,000				84,000
Less: Accumulated depreciation		(45,120	)			(23,000	)
Total assets	$	391,980			$	353,200
Liabilities:
Accounts payable	$	14,000			$	16,800
Salaries and Wages Payable		2,800				1,400
Notes payable, long-term		70,000				84,000
Shareholders Equity:
Common shares		132,000				112,000
Retained earnings		173,180				139,000
Total liabilities and shareholders equity	$	391,980			$	353,200
Income Statement
Sales	$	360,000
Cost of goods sold		190,000
Depreciation expense		22,120
Other expenses		90,000
Net income	$	57,880

Other information from the companys records includes the following:

• Bought equipment for cash, $74,000.
• Paid $14,000 on long-term note payable.
• Issued new shares of common shares for $20,000 cash.
• Cash dividends of $23,700 were declared and paid to shareholders.
• Accounts Payable arose from inventory purchases on credit.
• Income tax expense ($14,470) and interest expense ($4,200) were paid in full at the end of both years and are included in Other Expenses.

Required:

1. Prepare the statement of cash flows using the indirect method. Include any supplemental disclosures. (Enter any deductions and cash outflows as a negative value.)

Answer & Explanation Solved by verified expert

See Answer