Question: Assume the same facts as PA12 4 except for the income

Assume the same facts as PA12-4, except for the income statement and additional data item (a). The new income statement is shown on the following page. Instead of item (a) from PA12-4, assume that the company bought new equipment for $1,800 cash and sold existing equipment for $500 cash. The equipment that was sold had cost $1,300 and had Accumulated Depreciation of $250 at the time of sale.
Income Statement for 2013
Lessons Revenue ......... $37,500
Wages Expense ........... 35,000
Depreciation Expense ....... 500
Loss on Disposal of Equipment ..... 550
Income Tax Expense ........ 200
Net Income ............ $ 1,250

1. Prepare the statement of cash flows for the year ended December 31, 2013, using the indirect method.
2. Use the statement of cash flows to evaluate the company’s cash flows.

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  • CreatedFebruary 27, 2015
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