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

Required:
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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