Question

In: Accounting

ABC Company’s income statement for the year ended December 31, 2018: Sales $600,000 Cost of goods...

  1. ABC Company’s income statement for the year ended December 31, 2018:

Sales

$600,000

Cost of goods sold

($375,000)

Rent

($37,500)

Salaries

($37,500)

Interest

($7,500)

Depreciation

($22,500)

Gain on sale of assets

$7,500

Net income

$127,500

The balance sheets as of December 31, 2017 and 2018 were:

Description

2018

2017

Cash

$112,500

$24,000

Accounts Receivable

$45,000

$39,000

Inventory

$60,000

$57,000

Prepaid rent

$15,000

$18,000

Property, Plant & Equipment

$300,000

$285,000

Less: Accumulated Depreciation

($97,500)

($82,500)

Total Assets

$435,000

$340,500

Accounts Payable

$67,500

$60,000

Notes Payable

$58,500

$51,000

Common Stock

$187,500

$180,000

Retained Earnings

$121,500

$49,500

Total Liabilities and Equity

$435,000

$340,500

One machine included in Property, Plant & Equipment was sold on 1/1/2018. The original cost of the asset was $37,500.

Prepare a cash flow statement for the year ended December 31, 2018. Use the indirect approach for the operating cash flow section of the statement.

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Expert Solution

ekkarill92 answered 1 year ago
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