Question

Sawada Trades, Inc.’s income statement and comparative balance sheets appear as follows:
Additional information related to business activities during 2014:
1. All accounts payable pertain to inventory purchases, and accrued liabilities pertain to other operating expenses.
2. The original cost of the equipment sold was $43,000. New equipment was purchased and 5,000 common shares at $5 per share were issued as a partial payment.
3. Sawada declared and paid a dividend on December 30.
Requirements
1. Identify source and use of cash for each account in the Balance Sheet.
2. Calculate the cash receipt from the sale of equipment and the cost of the new equipment, using T-accounts to show your calculations.
3. Prepare a cash flow statement, using the indirect method.
4. Prepare the cash flow from operating activities section by using the direct method.


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  • CreatedJuly 08, 2015
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