In: Accounting
Please prepare Cash Flow Statement using direct Method of the Income Statement, using information from the attached document.
The comparative balance sheet of MARC22 CO, for 2021 and the preceding year ended December 31, 2020 appears below in condensed form:
Year |
Year |
|
2021 |
2020 |
|
Cash |
$ 45,000 |
$ 53,500 |
Accounts receivable (net) |
51,300 |
58,000 |
Inventories |
147,200 |
135,000 |
Investments |
0 |
60,000 |
Equipment |
493,000 |
375,000 |
Accumulated depreciation-equipment |
(113,700) |
(128,000) |
$622,800 |
$553,500 |
|
Accounts payable |
$ 61,500 |
$ 42,600 |
Bonds payable, due 2024 |
0 |
100,000 |
Common stock, $10 par |
250,000 |
200,000 |
Paid-in capital in excess of par-- |
||
common stock |
75,000 |
50,000 |
Retained earnings |
236,300 |
160,900 |
$622,800 |
$553,500 |
The income statement for the current year is as follows:
Sales |
$623,000 |
|
Cost of merchandise sold |
348,500 |
|
Gross profit |
$274,500 |
|
Operating expenses: |
||
Depreciation expense |
$24,700 |
|
Other operating expenses |
75,300 |
100,000 |
Income from operations |
$174,500 |
|
Other income: |
||
Gain on sale of investment |
$ 5,000 |
|
Other expense: |
||
Interest expense |
12,000 |
(7,000) |
Income before income tax |
$167,500 |
|
Income tax |
64,100 |
|
Net income |
$103,400 |
Additional data for the current year are as follows:
(a) |
Fully depreciated equipment costing $39,000 was scrapped, no salvage, and equipment was purchased for $157,000. |
(b) |
Bonds payable for $100,000 were retired by payment at their face amount. |
(c) |
5,000 shares of common stock were issued at $15 for cash. |
(d) |
Cash dividends declared were paid $28,000. |
(e) |
All sales are on account. |
Prepare a statement of cash flows, using the direct method of reporting cash flows from operating activities.
Decrease in cash |
$ (8,500) |
||
Cash at the beginning of the year |
53,500 |
||
Cash at the end of the year |
$ 45,000 |
Statement of Cash Flows - Direct Method | ||||
© www.excel-skills.com | Amount | |||
Cash flows from operating activities | ||||
Cash Receipts: | ||||
Cash receipts from customers (Wn1) | $ 6,29,700 | |||
Cash Payments: | ||||
Cash paid for Merchandise (WN2) | $ -3,41,800 | |||
Cash Paid for Operating Expenses | $ -75,300 | |||
Cash Paid for income taxes | $ -64,100 | |||
Cash paid for interest expenses | $ -12,000 | |||
Net cash from operating activities | $ 1,36,500 | |||
Cash flows from investing activities | ||||
Purchase of Equipment | $ -1,57,000 | |||
Sale of investment | $ 65,000 | |||
Net cash used in investing activities | $ -92,000 | |||
Cash flows from financing activities | ||||
Redumption of bonds payable | $ -1,00,000 | |||
Issuance of common stock | $ 75,000 | |||
Payment of cash dividend | $ -28,000 | |||
Net cash used in financing activities | $ -53,000 | |||
Net increase in cash and cash equivalents | $ -8,500 | |||
Cash and cash equivalents at beginning of period | $ 53,500 | |||
Cash and cash equivalents at end of period | $ 45,000 | |||
Working notes: 1 | ||||
Calculation of cash collection from customer | ||||
Sales | $ 6,23,000 | |||
Add: Opening AR | $ 58,000 | |||
Less: Closing AR | $ 51,300 | |||
Cash Collected | $ 6,29,700 | |||
Working notes: 2 | ||||
Calculation of purhcase of inventory | ||||
Cost of Goods Sold | $ 3,48,500 | |||
Add: Closing inventory | $ 1,47,200 | |||
Less : Opening Inventory | $ 1,35,000 | |||
Material Purhcased | $ 3,60,700 | |||
Calculation of amount paid to supplied | ||||
Op. Balance of Acct Payabl e | $ 42,600 | |||
Add: Purchases | $ 3,60,700 | |||
Less: Cl. Balance of Account payable | $ 61,500 | |||
Cash paid | $ 3,41,800 |