Question

Question No: 2                                                                                          SLO: 3

                                                                                          

Ahmed and company has prepared the following comparative balance sheets for December 31, 2018 and 2019:

Particulars	Dec. 31, 2019	Dec.31,2018
Assets:	Amount	Amount
Cash	$ 297,000	$ 153,000
Accounts Receivables	159,000	117,000
Inventory	150,000	180,000
Prepaid Expenses	18,000	27,000
Plant Assets	1,260,000	1.050,000
Accumulated Depreciation	(450,000)	(375,000)
Patent	153,000	174,000
Total Assets	$1,587,000	$1,326,000
Liabilities and Stockholder Equity	Amount	Amount
Accounts Payable	$ 153,000	$ 168,000
Accrued liabilities	60,000	42,000
Mortgage payable	-	450,000
Preferred stock	525,000	-
Additional paid-in capital - preferred	120,000	-
Common Stock	600,000	600,000
Retained Earnings	129,000	66,000
Total Liabilities and Stockholder Equity	$1,587,000	$1,326,000

Additional Information:

1. The Accumulated Depreciation account has been credited only for the depreciation expense for the period.
2. The Retained Earning account has been charged for dividends of $138,000 and credited for the Net Income for the year.

The Income Statement of Ahmed and Company on December, 31 2019 is as follows:

              Sales                                 $1,980,000

              Cost of goods sold             1,089,000

              Gross Profit                           891,000

              Operating expenses               690,000

    Net Income                      $   201,000

Instructions:

From the information above, prepare a statement of cash flow (indirect method) and prepare a schedule of cash provided by operating activities using the direct method.

Answer 1

Answer :- 1) $287,000 2)$ 307,000

Explanation :-