Question

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. depreciation—Equipment		(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 1