Question

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	$	125,100			$	142,200
Accounts receivable		152,000				133,000
Merchandise inventory		114,000				123,500
Property and equipment		218,000				114,000
Less: Accumulated depreciation		(63,520	)			(33,000	)
Total assets	$	545,580			$	479,700
Liabilities:
Accounts payable	$	19,000			$	22,800
Salaries and Wages Payable		3,800				1,900
Notes payable, long-term		95,000				114,000
Stockholders’ Equity:
Common stock		172,000				152,000
Retained earnings		255,780				189,000
Total liabilities and stockholders’ equity	$	545,580			$	479,700
Income Statement
Sales	$	560,000
Cost of goods sold		290,000
Depreciation expense		30,520
Other expenses		140,000
Net income	$	99,480

Other information from the company’s records includes the following:

• Bought equipment for cash, $104,000.
• Paid $19,000 on long-term note payable.
• Issued new shares of common stock for $20,000 cash.
• Cash dividends of $32,700 were declared and paid to stockholders.
• Accounts Payable arose from inventory purchases on credit.
• Income tax expense ($24,870) and interest expense ($5,700) 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 1