Question

In: Accounting

Question No: 2                                        &

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.

Solutions

Expert Solution

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

Explanation :-


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