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Use the following financial statements and additional information. VANCOUVER INC. Comparative Balance Sheets June 30, 2019...

Use the following financial statements and additional information.

VANCOUVER INC.
Comparative Balance Sheets
June 30, 2019 and 2018
2019 2018
Assets
Cash $ 74,000 $ 29,300
Accounts receivable, net 78,000 61,000
Inventory 66,000 92,000
Prepaid expenses 5,500 6,900
Total current assets 223,500 189,200
Equipment 173,000 160,000
Accum. depreciation—Equipment (42,000 ) (14,000 )
Total assets $ 354,500 $ 335,200
Liabilities and Equity
Accounts payable $ 30,000 $ 36,000
Wages payable 8,000 20,000
Income taxes payable 4,700 5,200
Total current liabilities 42,700 61,200
Notes payable (long term) 38,000 75,000
Total liabilities 80,700 136,200
Equity
Common stock, $5 par value 220,000 160,000
Retained earnings 53,800 39,000
Total liabilities and equity $ 354,500 $ 335,200
VANCOUVER INC.
Income Statement
For Year Ended June 30, 2019
Sales $ 904,000
Cost of goods sold 553,000
Gross profit 351,000
Operating expenses
Depreciation expense $ 74,000
Other expenses 89,000
Total operating expenses 163,000
188,000
Other gains (losses)
Gain on sale of equipment 4,600
Income before taxes 192,600
Income taxes expense 58,950
Net income $ 133,650


Additional Information

  1. A $38,000 note payable is retired at its $38,000 carrying (book) value in exchange for cash.
  2. The only changes affecting retained earnings are net income and cash dividends paid.
  3. New equipment is acquired for $73,000 cash.
  4. Received cash for the sale of equipment that had cost $60,000, yielding a $4,600 gain.
  5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
  6. All purchases and sales of inventory are on credit.

Part 1 Journal Entry Worksheet

1. Reconstruct the journal entry for cash receipts from customers, incorporating the change in the related balance sheet account(s), if any.

2. Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any.

3. Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any.

4. Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any.

5. Reconstruct the journal entry for the sale of equipment at a gain, incorporating the change in the related balance sheet account(s), if any.

6. Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any.

7. Reconstruct the entry to record the retirement of the $38,000 note payable at its $38,000 carrying (book) value in exchange for cash.

8. Reconstruct the entry for the purchase of new equipment.

9. Reconstruct the entry for the issuance of common stock.

10. Close all revenue and gain accounts to income summary.

11. Close all expense accounts to income summary.

12. Close Income Summary to Retained Earnings.

13. Reconstruct the journal entry for cash dividends

Part 2 - Statement of Cash Flows Direct Method

Prepare the Statement of Cash flows for the year ended June 30, 2019 using the Direct Method.  Hint Use the Cash T-account on the General Ledger tab to identify the sources and uses of cash. List cash outflows as negative values.
VANCOUVER INC.
Statement of Cash Flows (Direct Method)
For Year Ended June 30, 2019
Cash flows from operating activities:
Cash flows from investing activities:
Cash flows from financing activities:

Part 3 - Statement of Cash Flows Indiret Method

Prepare the operating activities section of the statement of cash flows using the indirect method.  Enter reductions to net cash provided by operating activities as negative values.

UnadjustedAdjustedPost-closing

Unadjusted
VANCOUVER INC.
Statement of Cash Flows (Indirect Method)
For Year Ended June 30, 2019
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:

Solutions

Expert Solution

Account Titles Debit Credit
Cash $     887,000
Accounts Receivable $        17,000
Sales $       904,000
Cost of Goods Sold $     553,000
Accounts Payable $          6,000
Inventory $         26,000
Cash $       533,000
Depreciation Expense $        74,000
Accumulated Depreciation $         74,000
Other Expense $        89,000
Wages Payable $        12,000
Prepaid Expenses $           1,400
Cash $         99,600
Cash $        18,600
Accumulated Depreciation $        46,000
Equipment $         60,000
Gain on Sale of Equipment $           4,600
Income tax expense $        58,950
Income tax payable $             500
Cash $         59,450
Notes Payable (Long term) $        38,000
Cash $         38,000
Equipment $        73,000
Cash $         73,000
Cash $        60,000
Common Stock $         60,000
Sales $     904,000
Gain on Sale of Equipment $          4,600
Income Summary $       908,600
Income Summary $     774,950
Cost of Goods Sold $       553,000
Depreciation $         74,000
Other Expenses $         89,000
Income taxes expense $         58,950
Income Summary $     133,650
Retained Earnings $       133,650
Retained Earnings $     118,850
Cash $       118,850
Cash Flow Statement
Direct Method
Cash flow from Operating Activities
Cash Inflows
Cash Collected from customers $       887,000
Cash Paid to Suppliers $     (533,000)
Cash paid for other expenses $       (99,600)
Cash paid for income tax $       (59,450)
Net Cash from operating activities $         194,950
Cash flow from Investing Activities
Sale of Equipment $         18,600
Purchase of Equipment $       (73,000)
Net Cash used in investing activities $         (54,400)
Cash flow from Financing Activities
Issue of Common Stock $         60,000
Issue of Notes Payable $           1,000
Paid for long term notes payable $       (38,000)
Payment of cash dividends $     (118,850)
Net Cash used in financing activities $         (95,850)
Net Increase in cash $           44,700
Cash, beginning of the year $           29,300
Cash, ending of the year $           74,000
Cash Flow Statement
Indirect Method
Cash flow from Operating Activities
Net Income $       133,650
Adjustments
Depreciation $        74,000
Gain on Sale of Equipment $        (4,600)
Change In current assets & Liabilities
Increase in Accounts Receivable $      (17,000)
Decrease in Inventory $        26,000
Decrease in Prepaid Expenses $          1,400
Decrease in Accounts payable $        (6,000)

ekkarill92 answered 1 year ago
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