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Use the following financial statements and additional information.
| STREAM LAUNCH INC. Comparative Balance Sheets June 30, 2019 and 2018 |
| | 2019 | | | 2018 | | |
| Assets | | | | | | | | |
| Cash | $ | 99,900 | | | $ | 58,700 | | |
| Accounts receivable, net | | 73,000 | | | | 57,000 | | |
| Inventory | | 66,000 | | | | 92,000 | | |
| Prepaid expenses | | 4,600 | | | | 5,700 | | |
| Total current assets | | 243,500 | | | | 213,400 | | |
| Equipment | | 134,000 | | | | 124,000 | | |
| Accum. depreciationEquipment | | (33,000 | ) | | | (11,000 | ) | |
| Total assets | $ | 344,500 | | | $ | 326,400 | | |
| Liabilities and Equity | | | | | | | | |
| Accounts payable | $ | 30,000 | | | $ | 36,000 | | |
| Wages payable | | 7,000 | | | | 18,000 | | |
| Income taxes payable | | 4,000 | | | | 4,400 | | |
| Total current liabilities | | 41,000 | | | | 58,400 | | |
| Notes payable (long term) | | 38,000 | | | | 75,000 | | |
| Total liabilities | | 79,000 | | | | 133,400 | | |
| Equity | | | | | | | | |
| Common stock, $5 par value | | 220,000 | | | | 160,000 | | |
| Retained earnings | | 45,500 | | | | 33,000 | | |
| Total liabilities and equity | $ | 344,500 | | | $ | 326,400 | | |
| |
STREAM LAUNCH INC. Income Statement For Year Ended June 30, 2019
Sales $ 713,000
Cost of goods sold 436,000
Gross profit 277,000
Operating expenses
Depreciation expense $ 62,000
Other expenses 70,000
Total operating expenses 132,000 145,000
Other gains (losses)
Gain on sale of equipment 2,300
Income before taxes 147,300
Income taxes expense 45,090
Net income $ 102,210
Additional Information.
A) A $38,000 note payable is retired at its $38,000 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 $61,000 cash.
D) Received cash for the sale of equipment that had cost $51,000, yielding a $2,300 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.
- Requirement
- General Journal
- General Ledger
- Trial Balance
- Direct Method
- Indirect Method
General Journal tab - Reconstruct the entries to summarize the activity between June 30, 2018 and June 30, 2019.
Direct Method tab - Prepare the Statement of Cash flows for the year ended June 30, 2019 using the direct method.
Indirect Method tab - Prepare the reconciliation to the indirect method.
Answer & Explanation
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