Question

plish Brothers Inc. reported the following information for 2022.

Splish Brothers Inc. Comparative Balance Sheets December 31 Assets 2022 2021 Change Increase/Decrease Cash $177,000 $108,000 $69,000 Increase Accounts receivable 186,000 66,000 120,000 Increase Inventory 132,000 –0– 132,000 Increase Prepaid expenses 18,000 12,000 6,000 Increase Land 165,000 210,000 45,000 Decrease Buildings 600,000 600,000 –0– Accumulated depreciation—buildings (63,000 ) (42,000 ) 21,000 Increase Equipment 549,000 204,000 345,000 Increase Accumulated depreciation—equipment (84,000 ) (30,000 ) 54,000 Increase Totals $1,680,000 $1,128,000

Liabilities and Stockholders’ Equity Accounts payable $129,000 $120,000 $9,000 Increase Accrued expenses payable 0 30,000 30,000 Decrease Bonds payable 300,000 450,000 150,000 Decrease Common stock ($1 par) 690,000 180,000 510,000 Increase Retained earnings 561,000 348,000 213,000 Increase Totals $1,680,000 $1,128,000

Splish Brothers Inc. Income Statement For the Year Ended December 31, 2022 Sales revenue $2,823,000 Cost of goods sold $1,425,000 Operating expenses 693,000 Interest expense 36,000 Loss on disposal of equipment 6,000 2,160,000 Income before income taxes 663,000 Income tax expense 195,000 Net income $468,000

Additional information: 1. Operating expenses include depreciation expense of $120,000.

2. Land was sold at its book value for cash.

3. Cash dividends of $255,000 were declared and paid in 2022.

4. Equipment with a cost of $498,000 was purchased for cash. Equipment with a cost of $153,000 and a book value of $108,000 was sold for $102,000 cash.

5. Bonds of $150,000 were redeemed at their face value for cash.

6. Common stock ($1 par) of $510,000 was issued for cash. Use this information to prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1