In: Accounting
Back Cove Company has the following comparative balance sheets and income statement:
2017 2016
Cash
$10,000
$15,000
Receivables
11,000
10,000
Inventories
22,000
18,000
Other Assets (net)
20,000
30,000
$63,000
$73,000
Accounts Payable $10,000 $20,000
Capital Stock $20,000 16,000
Retained Earnings 33,000 37,000
$63,000
$73,000
Sales
$110,000
Cost of Sales 72,000
Gain on sale of Assets 2,000
Expenses 16,000
Income $ 24,000
Depreciation expense was $5,000. A machine with a cost of $19,000 and book value of $13,000 was sold which produced the gain on sale of assets. Other assets were purchased for cash during the year, a dividend paid, and stock was issued for $4,000.
(1) Using the Indirect Method, prepare a cash flow statement.
(2) Assuming all operating expenses are paid for in cash and all inventory purchases are made on account, prepare cash from operations using the Direct Method.