Question

‏The comparative balance sheet of Four Seasons Enterprises Inc. for December

‏31, 2017 and​​​​ 2016, is as follows:

‏Dec. 31, 2017​​​​ Dec. 31, 2016

‏Assets Cash $ ​​​395,000 ​​​​$ 88,000

‏Accounts receivable (net) ​​225,000 ​​​​242,000

‏Inventories ​​​638,000 ​​​​576,000

‏Prepaid expenses ​​20,500 ​​​​15,000

‏Equipment ​​​895,000 ​​​​750,000

‏Accumulated depreciation—equipment (175,000) ​​​(140,000)

‏Total assets ​​​$1,998,500 ​​​$1,531,000

‏Accounts payable (merchandise creditors) $ 100,000​​​ $ 92,000

‏Mortgage note payable ​​0​​​​275,000

‏Common stock, $5 par ​​500,000 ​​​​250,000

‏Paid-in capital: Excess of issue over par—common stock 250,000 125,000

‏Retained earnings ​​1,148,500​​​ 789,000

‏Total liabilities and stockholders’ equity $1,998,500 ​​$1,531,000

‏Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2017 are as follows:

‏A. Net income, $175,000.

‏B. Depreciation reported on the income statement, $100,000.

‏C. Equipment was purchased at a cost of $115,000 and fully depreciated equipment costing $30,000 was discarded, with no salvage value realized.

‏D. The mortgage note payable was not due for five years, but the terms permitted earlier payment without penalty.

‏E. 20,000 shares of common stock were issued at $25 for cash.

‏F. Cash dividends declared and paid, $35,000.

‏Prepare a statement of cash flows, using the indirect method .

Answer 1