Question

Sharp Screen Films, Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: Current Year Prior Year Balance sheet at December 31 Cash $ 71,350 $ 66,500 Accounts receivable 20,250 26,450 Merchandise inventory 26,450 21,100 Property and equipment 214,450 153,700 Less: Accumulated depreciation (63,800 ) (48,350 ) $ 268,700 $ 219,400 Accounts payable $ 13,800 $ 24,300 Wages payable 4,900 7,600 Note payable, long-term 60,300 76,400 Common stock and additional paid-in capital 104,900 68,000 Retained earnings 84,800 43,100 $ 268,700 $ 219,400 Income statement for current year Sales $ 215,000 Cost of goods sold 112,000 Depreciation expense 15,450 Other expenses 45,000 Net income $ 42,550 Additional Data: Bought equipment for cash, $60,750. Paid $16,100 on the long-term note payable. Issued new shares of stock for $36,900 cash. Dividends of $850 were declared and paid. Other expenses all relate to wages. Accounts payable includes only inventory purchases made on credit. Required: 1. Prepare the statement of cash flows using the direct method for the year ended December 31, current year. (List cash outflows as negative amounts.)

Answer 1